Most consumers would agree that retail giant Home Depot (High Definition) – Get a free report is America's preferred home improvement store with Lowe's (LOW) – Get a free report coming in second place.
That was confirmed in October 2023 in a survey conducted by Today's Homeowner, which also placed Midwest regional home improvement store Menard's in third place among these big-box stores. The Ace hardware store chain, with smaller stores but many more locations than the big ones, took fourth place.
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Large home improvement store chains have always put pressure on the few remaining independent hardware stores and smaller retailers that specialize in home improvement products, such as window and glass products, carpet and flooring, and wood products. and painting, among others. Home Depot and Lowe's are attractive to many consumers as one-stop shops for many of these products, which may be to the detriment of smaller players.
Retail competition is not the only factor influencing the survival of home improvement retailers. Other economic impacts, such as rising rental rates, the effects of the Covid pandemic, or unexpected costs from litigation, can cause financial hardship.
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Kelly-Moore Paints closes all stores
Iconic paint retailer Kelly-Moore Paints has closed its 157 retail locations and laid off about 700 employees as it plans an orderly, extrajudicial shutdown of all of its business operations.
The regional paint store chain suffered financial difficulties for years from paying about $600 million in asbestos litigation claims and still faces millions of dollars more in payments for future asbestos claims as well as unpaid taxes. according to a statement.
Kelly-Moore, which operated in California, Nevada, Oklahoma and Texas, said in a statement that it would not file a Chapter 11 bankruptcy reorganization or a Chapter 7 liquidation because it does not have the capital to finance its continued operations, it leases everything of its facilities and has no unencumbered tangible assets that can be made available for distribution to its creditors.
The regional paint store chain, founded in 1946, moved its headquarters to Irving, Texas, in 2023 after operating from its main office in San Carlos, California, for 77 years.
The company had hired financial advisory firm Houlihan Lokey to help raise capital for a business turnaround and consider offers from interested investors, but was unable to obtain a letter of intent from any investors and failed to secure additional financing to continue. the operations.
The company began closing its facilities on Jan. 12, including all of its retail stores and its manufacturing plant in Hurst, Texas, but said it would attempt to continue fulfilling past customer orders for existing inventory at its Union City distribution. California. facility
Kelly-Moore said employees will be fully compensated for normal time worked and that management will continue its efforts to collect accounts receivable to pay all accrued benefits, including paid time off.
Asbestos litigation causes financial hardship
The company said that over the past 30 years it has faced thousands of asbestos litigation claims related to its past use of asbestos in cement and texture products under previous ownership, a practice that was discontinued in 1981. Despite paying around of $600 million in asbestos claims Over the past 20 years, a study commissioned by the company estimates its future asbestos liabilities will exceed $170 million.
Pleuger Chemicals acquired Kelly-Moore in October 2022 and appointed turnaround management professional Charles Gassenheimer as CEO to evaluate and implement strategies to improve the company's difficult financial situation.
“Our owners took significant financial risks in last year's acquisition,” Gassenheimer said in a statement. “Unfortunately, despite their extraordinary efforts after acquiring this distressed business, they were simply unable to overcome the unexpectedly large challenges and will be exiting the business.”
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