Ashley Furniture Homestore, which abruptly closed its store at Waikele Center on Friday, doesn't plan to give full refunds to all customers who had pending orders.

Instead, certain customers awaiting orders are being promised a store credit to purchase merchandise remaining in the store that may not be similar to what was ordered.

Store management yesterday issued a statement that said some, but not necessarily all, customers will receive refunds for purchases of furniture that can't be delivered.

Also, customers with merchandise that was in Ashley Furniture's local warehouse are still having orders delivered.

But part of the retailer's refund program is angering some customers, and is being questioned by the state Office of Consumer Protection, which since Monday has received about 20 requests for complaint forms regarding Ashley Furniture's shutdown.

"If a consumer paid for furniture and can't get the furniture, then (the retailer) should provide the person's money back," said Stephen Levins, executive director of the consumer protection office. "That's the right thing that should happen."

One customer who contacted The Advertiser but didn't want his name published because of possible litigation with the store, said he paid roughly $4,000 cash for a dining set and entertainment center he ordered in August and got the entertainment center Friday.

"It's caused a lot of consternation," said the customer, who hasn't heard from the company and isn't sure whether he's going to get his dining set or a store credit. "I wanted the piece (of furniture I ordered). That's why I waited 11 weeks for it."

Owners of the Ashley Furniture store have apologized to customers via letter and yesterday said Hawai'i's softening housing market led to financial difficulties and the closing of the 50,000-square-foot locally owned 4-year-old store.

The retailer on Saturday mailed letters to an estimated 200 customers with pending purchases, informing them of their specific options.

In general, customers who paid by credit card are being advised to reverse their purchases by telling their credit card company that they didn't receive the merchandise, though some customers may have the option of taking delivery and letting the purchase stand.

Customers who used cash to make deposits or full payments for furniture after Nov. 3 (a week before the store closed) will receive a full refund.

But customers who made cash deposits or full payments before Nov. 3 will receive a store credit they can use to buy items in the store on a "first come, first serve" basis. To enter the store, customers must make an appointment with McClain Auctions, which is liquidating the inventory valued at about $3 million.

At noon on Nov. 24, McClain Auctions will hold a public liquidation of remaining inventory.

Marty McClain, of McClain Auctions, said cash refunds for orders made before Nov. 3 are unlikely. That's because net proceeds from the liquidation sale will go primarily to pay GE Commercial Finance Corp., which essentially owns the store's inventory that was used as collateral.

McClain and Ashley Furniture did not say how much GE Commercial and other creditors, including The Advertiser, are owed.

Local businessman Michael Cutler, who owned the Ashley Furniture store mainly with other local investors, said in an interview that business weakened significantly early this year, mostly because of a dramatic slowdown in home sales.

Cutler also said other factors as early as last fall also began contributing to the store's eventual downfall, including a modest rise in interest rates, soaring gasoline prices after Hurricane Katrina and military deployments to Iraq.

"It's taken tons of discretionary income from consumers," he said. "It was almost like a perfect storm."

Nationwide, furniture retailing is going through a slowdown largely because of the slumping housing market, and the industry has experienced some recent contraction.

The local Ashley Furniture store hired turnaround experts at California-based Schulze Haynes Loevenguth & Co., who helped negotiate with creditors and cut overhead expenses.

But the retailer's financial woes resulted in inconsistent deliveries from its Wisconsin-based manufacturer Ashley Furniture Industries Inc., which licenses and supplies more than 250 independently owned Ashley Furniture Homestores.

Cutler said that up until a week ago, he thought the store would survive, but on Nov. 8, he said, ceasing operations was forced after Ashley Furniture Industries refused to send any more merchandise.

"We didn't want to leave the market," he said.

A representative of Ashley Furniture Industries did not respond to a request for comment yesterday.

Levins, of the state consumer protection office, said it would be a very serious matter for any business to take money from consumers for orders after knowing it couldn't fulfill the orders.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.