Gottschalks moves to stem losses; selling card biz, closing stores
February 3, 2003-- Home Textiles Today,
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.
Additionally, six underperforming stores, located primarily in Seattle and the Pacific Northwest, will be closed in the next 90 days, the merchant said.
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.