Gottschalks moves to stem losses; selling card biz, closing stores
February 3, 2003,
Fresno, CA — Gottschalks is closing six stores and selling off its credit card business as part of a five-point financial restructuring plan intended to improve liquidity and cut debt, the company announced this morning.
It also said it expects to take a one-time, non-cash fourth quarter charge of $3 million tied to the closings. The overall plan is expected to reduce the retailer's debt load by roughly $37 million. Household International is buying the credit card business, which consists of more than one million accounts with annual sales in excess of $300 million, according to the company.
Among other provisions of the plan:
The retailer expects to begin opening two new stores a year beginning in spring, 2004. Several locations in California are currently under consideration, the company said.
It expects to achieve a long-term goal of keeping expenses below 30 percent of sales. It expects to reduce expenditures by about $15 million annually, including store closings and the benefit realized from the sale of its credit card business.
It will reduce capital expenditures by $7 million to $9 million annually, redirecting a portion of that budget to store maintenance and improvements.
The retailer will also seek to expand its private label offerings
Gottschalks reported a loss of $2.6 million in the third quarter, including tax credits.