Officials concerned about job loss after Orchard closure announcement

SAN JOSE, Calif. (KGO) -- A San Jose institution is closing. The corporate owner of Orchard Supply Hardware says it's closing all 99 stores in three states because it's losing money. Lowe's purchased the San Jose based hardware store chain five years ago.

Orchard Supply got its name because it was originally a farmers cooperative, started by 30 prune growers in 1931 in San Jose. But after World War II as the post-war baby and housing boom unfolded, it became a hardware store appealing to home owners.

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Its customers have been loyal for decades. They say it's the customer service that keeps them coming.

"Today we went and bought some peat moss for our plants," said San Jose resident Andrew Wong. "I felt like the individuals were always knowledgeable in the departments; it's just not the same feeling, shopping experience you get like in the big box stores."

In recent years, big box stores like Lowes and Home Depot popped up. Last year, Orchard Supply, or OSH, did $600 million in sales but lost $65 million for corporate owner Lowe's, which thought OSH could grow as a small box specialty chain.

Lowe's paid $205 million for OSH in 2013, but the decision to close it will have an immediate $230 million impact on earnings. It's reported Lowe's will incur up to $475 million in additional expenses by the time all 99 stores shut down in California, Oregon and Florida by year's end. OSH has about 4,000 employees.

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One of those losing a job is Mayor Sam Liccardo's sister-in-law.

"We're concerned about the people," said Liccardo. "We know hundreds of people are out of jobs, so through our Work2Future nonprofit partner, we work on job retraining and helping them find new positions."

Lowe's executives say OSH employees will be given priority for jobs at Lowe's stores. On an earnings call Wednesday morning with investor analysts, Lowe's said that 86 percent of OSH stores are in a 10-mile radius of Lowe's stores. The company decided to focus more attention and resources to improving existing Lowe's stores.

Some OSH customers are grumbling about switching stores where they say they aren't treated as well. One of them is Michael Silveira, who drove to the OSH store on Cottle Road in San Jose from his home in Gilroy.

At other stores, he told ABC7 News, "I always get, oh, this isn't my department, so let's look for it together. Nah, not a good sign."

Clearance sales will begin Thursday and will run for about 10 weeks.

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