Lack's Stores Inc. announces bankruptcy, store closures
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WHAT IS CHAPTER 11 BANKRUPTCY?It allows an organization to work to keep the business alive while paying creditors over a period of time.
Lack's Stores Inc. will file for Chapter 11 bankruptcy and close its 36 retail locations statewide, the company announced Monday.
Lending issues are behind the announcement, according to a company news release.
Throughout its 73-year history, Lack's financed customer accounts and borrowed funds from banks and lenders to finance receivables, according to the release. Lenders recently announced they will no longer lend money on receivables, however, and demanded repayment of the loan.
" ... This has resulted in the necessity of this current action, notwithstanding our company's strength, viability and profitability," the release said. Company officials would not comment further.
It remains unclear whether the company plans to emerge from bankruptcy and how many Victoria employees are affected by the announcement.
The company will host "store closing" sales at each of its retail locations throughout the next 45 to 75 days.
Losing a company like Lack's is devastating, said Randy Vivian, president and CEO of the Victoria Chamber of Commerce. The business has a long history with Victoria and boasts a great reputation.
The economy and federal regulations have forced small businesses into the corner, Vivian said, and it will be a "long, tough haul" to get out of this.
"This is a company that has been profitable, even during an economic downturn," he said. "The last two years have been strong and, for a company like that to not be able to get financing, that's scary."
Company sales came in at more than $200 million before the current recession hit, and 1,200 employees worked for Lack's, according to the news release. The recession, which began in 2008, brought a 20-percent drop in sales and pushed the company to cut expenses, including terminating 300 jobs.
Since then, Lack's remained profitable, according to the release. The company operates 36 retail sites and distribution and delivery facilities across Texas.
Lack's news came as a surprise, said Ben Streiff, director of operations at Ashley Furniture's Cuero warehouse.
"The Lack family is a wonderful family and they've been great competition in the market," he said. "We wish them the best of luck in future endeavors."
The company maintained a loyal customer base, and Streiff said he hoped to see those customers continue to shop locally.
Bobby Leon, who owns Chesnick Furniture Co. in Victoria, and said that although Lack's is another furniture business, he considers its owners more friends than competition.
"Their family and our family have always been very close," he said. "It's a kinship. And it's very sad to hear. They're a classy business and a classy operation."
Closing the retail site will have an impact on Victoria, said Dale Fowler, president of the Victoria Economic Development Corp.
Sales the company would have made will spill over to other furniture dealers, he said, but the bigger issue is the loss of jobs. It also has an impact on positions that support retail operations at corporate headquarters, such as the administrative staff, human resources and the like.
"Those are usually higher-wage jobs," he said. "That will have a bigger impact."
Vivian estimated the company employs about 200 people in Victoria.
"My best to the Lack family and all their employees," he said. "We'll continue to work to try to bring new businesses in so employees can work to find other employment."
Lack's got its start in 1938, when Dave and Rebecca Lack purchased a 900-square-foot auto supply store in Beeville, according to the news release. Lack's purchased the Victoria site in 1941 and moved to the city, where the company is still headquartered today.
The company estimates it has paid nearly $1 billion in salaries and wages to associates through the years, according to the release. It has also given back to a variety of charities, educational organizations and arts organizations over time.