Art Van Furniture Inc. will close all of its more than 300 stores after struggling with heavy debt and a disrupted furniture and mattress retail landscape under private-equity ownership.

The company announced Thursday it would begin the wind down of operations and begin liquidation sales of all of its company-owned stores Friday. Hilco Global and Gordon Brothers have been retained to assist Art Van in liquidating, the company told employees in a memo sent Thursday and obtained by Crain's Detroit Business.

Including locations in northwest Indiana, Art Van has 24 furniture and mattress stores in the Chicago area. The company made a big push into the Chicago market about six years ago.

Art Van's roughly 200 Levin Furniture and Wolf Furniture stores, which the company acquired in 2017, will be sold back to former owner Robert Levin, pending court approval, the company said in a press release. Eight of those stores, however, will be liquidated, the company said in the employee memo.

Crain's Detroit reported last month that the retailer's private-equity owner, Thomas H. Lee Partners LP was exploring options that could include a sale and bankruptcy. Thomas H. Lee acquired the Warren, Mich.-based retailer in 2017 for an estimated $550 million.

"Despite our best efforts to remain open, the Company's brands and operating performance have been hit hard by a challenging retail environment," said Diane Charles, Art Van Furniture spokesperson. "We recognize the extraordinary retail, community and philanthropic legacies that Art Van Furniture has built for decades in the community."

Last month, Thomas H. Lee was said to be working with advisers and creditors to find a buyer, included the family of its late founder, Art Van Elslander, one source close to the negotiations who requested anonymity told Crain's Detroit.

The Van Elslander family, led by Art Van Furniture Chairman Gary Van Elslander, made overtures to be the stalking-horse bidder in a Chapter 11 reorganization plan, a source familiar with the negotiations said. But a deal failed to materialize.

"The Van Elslander family's hearts go out to the employees of Art Van Furniture and to others who are affected by TH Lee's announcement," Gary Van Elslander said in a written statement. "This is a great loss to our communities of one of the great retail furniture brands."

Speaking on behalf of the family's company, Diane Wells, COO of the family's company VEC LLC, said conversations never made it to the point of the family making a firm offer.

"The family was open to conversations with Art Van Furniture stakeholders regarding potential involvement in keeping the stores open, and those conversations were not fruitful," Wells said in an email.

The latest move comes just three years after the 61-year-old company was acquired. Thomas H. Lee set forth an aggressive growth strategy for Art Van after it completed the deal.

Under longtime CEO Kim Yost, the then-190-store company set forth a plan in 2018 to open 200 more stores and double revenue to $2 billion by 2022, the Detroit Free Press reported.

But the largest furniture and mattress company in the Midwest has faced tremendous disruption from changing furniture shopping habits in recent years.

Online companies such as Wayfair in furniture and Casper, Leesa and Tuft & Needle in bedding have gobbled up market share away from legacy traditional retailers like Art Van and competitor Gardner White. Online retail giant Amazon is also cutting into its bottom line.

The 25 largest furniture and bedding retailers in the U.S. combined for a 7.5 percent increase in sales to $45.7 billion in 2018, according to a report in Furniture World. However, it was Amazon and Wayfair that dominated that increases. The pair combined for an estimated 35.8 percent increase in estimated furniture and bedding sales in 2018.

Nearly 20 percent of all U.S. furniture sales are now online, according to IBISWorld data. Traditional brick-and-mortar outlets continue to lose market share even as total sales increase, with the exception of manufacturer-branded companies such as Monroe-based La-Z-Boy Furniture, according to Furniture Today.

An Art Van competitor, Houston-based Mattress Firm Holdings, entered Chapter 11 bankruptcy after an acquisition binge that grew its footprint to 3,230 storefronts and 10,000 employees. The mattress retailer ballooned revenue to $3.4 billion in 2018 from just $432.3 million in 2009, but was bleeding money for years. It reported a $54 million net loss in 2018.

Upon exiting bankruptcy in November 2018, Mattress Firm closed as many as 900 underperforming stores.

Thomas H. Lee followed the same formula with Art Van with several bolt-on acquisitions. In 2017, Art Van acquired Levin Furniture in Pittsburgh and Wolf Furniture Co. in Altoona, Pa., in separate deals Crain's estimated at a total of $260 million.

The acquisitions boosted Art Van's workforce by 1,900 to 5,500 employees and added roughly 200 stores. Art Van reported to Crain's revenue of $850 million in 2018, up from $650 million in 2015.

Dustin Walsh writes for Crain's sister publication Crain's Detroit Business.