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Workers Demand Bankrupt Kika Pay Back Salaries

The innovatively designed but very expensive flagship Israeli branch of the international Kika chain is broke, and the store has been closed
By David Lev
First Publish: 5/10/2012, 1:56 PM

Kika Israel
Kika Israel
Flash 90

The Israeli branch of Austrian furniture chain Kika did not open for business Thursday morning, in a move that apparently signals the end of the chain's operation in Israel. Reports said that banks had pulled Kika's line of credit, making it impossible for the company to continue operating.

Store employees have apparently not been paid for April, either, and hundreds of workers were gathered in the store's parking lot, demanding that they be paid. According to the store's assistant manager, quoted by Yediot Achronot, the company did not have the funds to pay the workers, and it was unclear if the funds would be found. It is not clear if merchandise on order will be delivered, as well.

Several weeks ago, Globes reported that the Kika Israel owed nearly NIS 150 million, and that Ashtrom Properties, which owns 15% of the company, had already written it off as a loss. In April, Kika Israel reported that it had ended 2011, its first year of operation here, with a loss of NIS 44.5 million.

Kika opened in early 2011 with much fanfare, in an innovatively designed gallery structure in the South Netanya industrial zone. The store was opened several months after a fire destroyed the original Israeli branch of Swedish furniture giant Ikea, located in the same area.

Many Israelis flocked to Kika, but quickly realized that the Austrian chain, which carried premium brands at premium prices, was nothing like the more reasonably priced Ikea. When reporting its losses last month, Kika Israel officials said that part of the store's problem was “branding confusion” among customers, who had been expecting a shopping experience like Ikea. Ikea Netanya reopened for business last month.