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BREA, CA-Krause’s Furniture Inc., the beleaguered retailer that filed for bankruptcy last month, has begun closing the first of 41 US stores it plans to shutter as part of its reorganization.

The initial round of closures includes 25 stores in California, Texas, other parts of the Southwest and in the Northwest. When the cutting is done a few months from now, 41 of the company’s 98 stores will have been closed and more than 100 Krause workers will be furloughed.

The California stores include outlets in Chula Vista, La Mesa, LA, Montclair, Palm Desert, Sacramento, Santa Clarita and Van Nuys. Other major markets that will see closures include Dallas-Ft. Worth, Houston, Atlanta, Chicago and Portland, OR.

When it filed for bankruptcy last month, Krause said it had enough money to stay in business through the end of September as it attempts to reorganize, potentially through a management buyout. If the buyout doesn’t go through or another buyer isn’t found by Sept. 30, the company plans to cease operations and liquidate.

The bankruptcy filing came about two months after its accounting firm, Arthur Andersen, resigned after questioning Krause’s ability to continue operating. The company lost $9 million on sales of $36 million during the first quarter, a three-month period that included a $3.1-million charge from previous store closures.

Though many furniture chains have been battered by heightened competition and the recent economic slowing, Krause has arguably suffered worst of all. It hasn’t had a profitable quarter since 1994.

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