CHARLOTTE - Grocer Carter's Inc., which racked up more than $20 million in debts, has shuttered its 14 Michigan stores and filed for bankruptcy.
The food retailer filed for Chapter 7 bankruptcy Wednesday, citing "serious financial difficulties," ranging from debts to its main supplier to unpaid utility bills resulting in shutoff notices. The filing means Carter's plans to liquidate, selling assets and distributing proceeds among creditors.
The grocer had little choice but to go out of business, company lawyer Willard Hawley said. Several creditors have taken court action. Its main supplier, Minneapolis-based Nash Finch Co., cut off shipments to its stores.
"The company certainly didn't want to have to take this action, but under the circumstances thought it was the appropriate course," Hawley said.
About 50 people worked at the Charlotte Theo Carter's store and corporate headquarters, according to the Charlotte Chamber of Commerce.
Statewide, the company employed 375, Hawley said. All were stockholders in the employee-owned business.
Carter's expects to file documents detailing more than $20 million in debts to up to 2,000 creditors within 15 days, Hawley said.
Nash Finch issued a warning June 29 to investors "that actions taken against a longtime customer by another creditor" would require it to take a $6 million to $8.5 million hit on its second-quarter earnings. Nash Finch spokeswoman LeAnne Stewart would not say if that customer is Carter's and declined to say how much the grocer owes the company.
Carter's says in court documents it has an unpaid loan from Nash Finch.
The grocer also owes Grand Rapids produce wholesaler J.A. Besteman Co. nearly $1 million. A federal judge on Wednesday ordered Carter's to pay that debt immediately from revenue not being used to pay salaries or state lottery trust obligations.
The company leased all its stores except the Charlotte location, said Hawley, who declined to estimate the value of the company's assets.
Founded in 1952
Carter's was founded in 1952 by Charlotte native Theo Carter, who opened his first store near the city's airport on Lansing Road. The company grew to more than 20 stores by early this decade and became employee-owned in 2000.
But the company has "suffered a decline in revenues" that caused "substantial losses" in recent years, court filings said. Profits for grocery stores are traditionally low, giving food retailers little room for risk, said Judy Whipple, an associate professor of supply chain management at Michigan State University.
"Certainly, the industry is very price competitive," Whipple said. Smaller grocery stores like Carter's "have got to be offering something unique and different if they can't compete on price."
Facing increased pressure from Wal-Mart Stores Inc. and Meijer Inc. stores in Charlotte, Carter's in 2001 closed a 49,000-square-foot store it built there in 1992. But some shoppers still preferred Carter's over its larger rivals, whose stores generally are 150,000 to 200,000 square feet.
"It was nice because it was in between the size of a convenience store and a huge supermarket," said Barb Belligan, whose home is across the street from the downtown Carter's store. "They had a nice selection, and I didn't have to go to a large store to get it."
Charlotte city officials have pledged to help find a new tenant for the store. But that could be a challenge, community development director Bryan Myrkle said.
"Unfortunately, as much as we think of Carter's as a little grocery store, it's a pretty big building," he said. "We have a number of big-box vacancies that have been languishing."
Staff writer Hugh Leach and Fran Wilcox of Lansing Community Newspapers contributed to this story. Contact Jeremy W. Steele at 377-1015 or firstname.lastname@example.org.
By Jeremy W. Steele Lansing State Journal