DECATUR - The entire K's Merchandise Mart store chain - including the Bloomington store and Decatur headquarters and distribution center - is closing. The announcement was made Tuesday and means some 1,500 employees will lose their jobs.
K's has 17 stores in Illinois, Indiana, Iowa, Missouri and Kentucky. About 80 workers are employed at the Decatur headquarters.
Weighed by sinking sales, K's faced a major crisis in January when its bankers declared the company in default and bankruptcy loomed.
It got a last-minute reprieve when Boston-based merchant banking and finance company Gordon Brothers stepped in and took the company over. They negotiated a $7 million deal to pay off more than 2,000 creditors and brought in new management and new approaches to try and keep K's alive. In July, the company said sales through the Christmas period would prove crucial in deciding the future.
K's was founded in downtown Decatur in 1957 by the late Raymond "Ray" Eldridge Sr. and was run by his family up until its financial difficulties.
Bill Weinstein, the new president of K's Merchandise, said "tens of millions of dollars" had been sunk into buying new inventory and making an effort to jump-start K's business heart. Sales looked good at first, but then faded.
"The improvement was not sustained," Weinstein added. "The company was continuing to lose sales and we had a declining sales base and we really just had to make a decision now. We could not sustain ourselves and incur anymore losses than we've incurred to date."
Weinstein said creditors on record now would be paid in full. He said liquidation sales would begin Thursday and continue with "aggressive" markdowns until everything was sold off.
The time that takes will determine how long the stores, corporate offices and distribution center stay open and how long employees will keep their jobs. All facilities owned by the company would then be sold.
"Hopefully, there will be some retailers who want to come in and take some of the properties and also, hopefully, take some of our employees with them," added Weinstein.
News of K's closure, a retail fixture in Decatur for 50 years, was greeted with sadness by shoppers and business leaders.
"I've bought kitchen and other appliances from them," said shopper Carolyn Wall, who lives in Cowden. In Decatur Tuesday morning for a doctor's appointment, she had ironically visited the Northgate Mall K's store after hearing rumors it had already closed.
"I came here to check it out," she added. "And now they really are closing, I'm going to miss them."
Weinstein said K's had a retail model that had worked well for years with a smorgasbord approach that offered something for everyone, from jewelry to couches and electronics.
But the retail ground had shifted as big box stores like Wal-Mart arrived and became "category killers" with pricing based on volume purchasing that made head-to-head competition very difficult.
"We had hoped we could overcome K's problems but we were not able to," he said. "… K's was very successful for a long time but it was not able to reinvent itself."