Kelly-Moore Paints, a longstanding manufacturer and retailer of paints and coatings across the western United States, has abruptly announced it will be winding down all of its operations and closing its outlets nationwide in the coming weeks.
Company Plans “Orderly Out-of-Court Liquidation” After Furloughing Hundreds Last Week
The abrupt announcement came as a shock, even after the company furloughed over 700 employees at multiple locations last week. Kelly-Moore has stated it intends to proceed with an “orderly out-of-court wind-down of company operations” over the next 60-90 days across its 61 retail outlets and manufacturing facilities.
This includes the closure of almost 50 stores across northern California, where Kelly-Moore was founded and headquartered for over 80 years, as well as over 10 locations that were opened more recently in the Dallas-Fort Worth area after the company relocated its headquarters to Texas in 2020. Kelly-Moore’s manufacturing plant in Hurst is also set to close.
The company has cited “significant operating losses and liquidity constraints” along with an “extremely challenging” retail paint industry environment as reasons for this drastic decision to cease trading entirely. Despite efforts to expand and cut costs, the company has clearly decided it is no longer financially viable to continue operating.
Hundreds of Jobs Lost in California and Texas
The wind-down will impact hundreds of staff members who now face imminent unemployment. This includes around 500 jobs lost in California locations such as San Francisco, Oakland, San Jose and Sacramento, along with over 200 staff at its newer Texas stores and manufacturing facilities.
Many long-serving employees were left stunned at the sudden announcement and the lack of forewarning. “It’s horrible,” said one assistant manager who had been with the company for over 20 years. “There is no money, no job, no nothing. I feel so bad for all the employees being put out of work.”
Recent Expansion Efforts Unable to Offset Challenging Market
In 2020, Kelly-Moore had relocated from its San Carlos headquarters to a new $13 million, 110,000-square-foot site in Hurst, Texas. This facility housed a high-output automated paint factory along with the company’s executive team. At the time, CEO Theo Hack said the move would “lead to logistical efficiencies and technological innovations”.
However, industry challenges severely impacted the company’s margins and recent attempts at cost cutting have evidently not been enough to return to profitability. Hack blamed “long-term competitive pressures and industry headwinds” along with recent economic uncertainty and high inflation dampening consumer spending.
Sudden Store Closures Leave Contractors and Customers in Limbo
The abrupt announcement and immediate store closures have also left many of Kelly-Moore’s trade customers scrambling to find new suppliers. Local contractors now have a limited window to collect account balances before locations are shuttered for good.
Long-time customers were equally shocked at the sudden demise of their go-to neighborhood paint provider. “I’ve been coming to Kelly-Moore for over 30 years. This really blindsided me and now I need to establish a relationship with a new store,” said Dan Collins of Oakland.
Retail analyst Neil Saunders commented on the closure saying, “for smaller independent players without the resources of larger retailers, conditions have become extremely harsh.”
Orderly Wind-Down to Take 2-3 Months
Kelly-Moore has stated it aims to continue normal operations at its stores during its wind-down period while inventory lasts. Its DIP lenders are providing additional funding to support payroll along with customer refunds and rebates during this process. However, given stores rely heavily on warehouse stock replenishments, locations are still expected to sell out within weeks.
The company has filed the Worker Adjustment and Retraining Notification Act (WARN) in California and Texas to commence mass layoffs within the next few months across its sites. Employees are unlikely to receive standard severance benefits given the firm’s financial situation.
| Site | Estimated Employees Impacted | Expected Closure Date |
|---|---|---|
| San Carlos Headquarters | 100 | Mid March 2024 |
| Hurst Manufacturing & Distribution Facility | 150 | April 2024 |
| Californa Retail Stores | 500 | 60 days from January 2024 |
| Texas Retail Stores | 200 | 60-90 days from January 2024 |
Buyers Unlikely to Rescue Filing Brand
Industry analysts say it is unlikely a buyer will emerge to save the Kelly-Moore brand given the wider struggles in the paint retail sector. In recent years several competitors have either filed Chapter 11 or closed locations after being unable to achieve profitable scale.
With Kelly-Moore’s decision to liquidate rather than restructure, their retail sites will likely be acquired in private sales by investors or other independent paint chains looking to expand their regional operations. “I would expect their stores to be sold off individually rather than the whole chain being acquired,” said industry expert Neil Saunders.
For contractors and customers across California and Texas, they will now be forced to switch to alternate suppliers like Miller Paints, Sherwin-Williams or smaller independent players to meet their painting needs. After more than 8 successful decades in business it appears the Kelly-Moore name will soon fade into the history books as the company meets its unfortunate end.
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