Inkstop store closings

Articles in the Cleveland Plain Dealer and elsewhere  have be chronicling the sudden closing of its 161 stores by Cleveland-area retailer Inkstop, owing back wages to hundreds of employees and canceling health-care insurance. There are also stories of suits being filed by, and on behalf of, former Inkstop employees.

Legal issues are up to the attorneys and courts to sort out. I am outraged at lousy treatment of employees and apparent poor management that let the company get to this point. According to today’s Plain Dealer article, employees can’t even qualify for COBRA health insurance benefits because the Inkstop health insurance plan no longer exists (apparently because premiums have not been paid). (This could certainly be part of the growing health-care debate, but that is beyond the scope of this posting).

While I have no knowledge of boardroom discussions, many management questions come to mind. How could management not foresee running out of cash and put into place contingency plans? According to various articles the company had been attempting to raise capital – but what were the plans if insufficient capital was raised? Were underperforming stores closed in an effort to conserve cash and take proper care of laid off and continuing employees? Did management really pay sufficient attention to costs, cash flow, and profitability? Could not the company have closed all stores sooner and provided final checks, extended health care, and even outplacement service to employees?

Inktop’s failure could be a casualty of the recession but, in my view, is probably more a casualty of poor planning, strategy, and management.

Will Limkemann