Bye-bye, Linens 'n Things

It looks like Linens 'n Things may be going Chapter 11 soon, and probably closing a bunch of stores.

Linens parent Linens Holding Co. said Tuesday it deferred a $16.1 million interest payment and is in talks with debt holders regarding a capital restructuring.

Several analysts believe the announcement is a precursor to a prepackaged bankruptcy filing for the struggling home-goods retailer, which has been caught by an increasing debt load and weak sales amid a shrinking housing market. Such a move would likely involve closing some of privately held Linens' 589 stores, according to analysts.

It's tempting to attribute this to the Two (or perhaps only one) Per Channel Theory, but I'm not sure if this case really fits. The difference between home furnishings and many other categories is that the "category killers" in this channel are really not all that large: Linens 'n Things represents only about 2% of the home furnishings market, and even the leader, Bed Bath & Beyond, is only 5%.