K's will close all its stores

~ The Cape Girardeau site will reopen Thursday for a liquidation sale.

Saying K's Merchandise was "never going to be able to return to profitability," company executives announced Tuesday that all 17 of its stores will close early next year, including the 10-year-old Cape Girardeau location.

That means that the 60 local store employees -- and the 1,500 across the company -- will be out of work when the stores close after all the merchandise is sold.

"This was obviously a company that was struggling," said K's vice president Joe McLeish. "The customer response was just not there. We had no reason to believe it was ever going to reach a level where the company would see a profit."

The K's in Cape Girardeau will be closed today in preparation for a liquidation sale that begins Thursday. McLeish said employees can stay on for the duration of the sale, which the company expects to last until after Christmas and into January.

The company, which has stores in Illinois, Indiana, Iowa and Missouri, has no severance package for the employees, McLeish said. However, he said the company's employees at the 17 stores will be paid all of their accrued vacation time for 2006 and 2007.

The announcement drew

John Mehner, president and CEO of the Cape Girardeau Chamber of Commerce, expressed sympathy for the K's employees. "Unfortunately, we're seeing more and more of this in the retail world, big and small," he said.

Still, Mehner expects the building at 371 S. Broadview St. will be a coveted spot for another retail location. "It's going to become an excellent retail building on the market," he said.

K's has had well-documented financial problems.

Founded in Decatur, Ill., in 1957 as a merchandise wholesaler, K's originally grew into a strong regional operator of catalog showroom stores, McLeish said, serving small and medium-sized communities. The stores featured a broad range of brand-name products, including sporting goods, furniture, electronics, housewares and jewelry.

But other sellers created challenges, forcing K's to compete in many categories and with many players -- national big-box operators, specialty stores and online shopping.

In January, K's primary lender declared the company in default and the business appeared on the verge of bankruptcy. But with the help of Gordon Brothers Group of Boston, a merchant banking and retail specialist, K's reached an out-of-court settlement with creditors.

Gordon Brothers Group provided a cash infusion to increase investments in marketing and merchandise, revamp the furniture department and expand the jewelry offering.

"We invested tens of millions of dollars hoping for a sales rebound that simply has not materialized," company president Bill Weinstein said in a prepared statement. "Based on the September sales reports, we've had to acknowledge that K's cannot overcome the competitive threats it faces in every market it serves."

smoyers@semissourian.com

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