Gottschalks Inc. (Fresno, Calif.) has said it will close six underperforming stores, improve operating income and reduce capital expenditures as part of a five-point plan to strengthen its financial structure.
The regional retailer, with 69 department stores and 13 specialty apparel stores in six Western states, has said the moves are necessary to position it for stable long-term growth. The five-point plan is also expected improve liquidity and reduce the company's debt by approximately $37 million.
The six store closings, in the Pacific Northwest, are expected to improve annual operating income by approximately $2 million. The stores, including four in the Seattle metro area, one in Wenatchee, Wash., and one in Corvallis, Ore., are either already closed or expected to close over the next 90 days.
In addition, the retailer will reduce its planned capital expenditures in 2003 by more than $9 million, to approximately $7 million. It will defer all new store openings to spring 2004, concentrating on maintaining and improving its existing store base.
In other parts of the plan, Gottschalks has sold its private label credit card business and will increase its private label assortment. “The company's merchants will more aggressively pursue opportunities with its private label brands in 2003, which differentiate the store's product offerings from competitors and historically have generated higher profit margins,” the company said in a statement. “[We have] had significant success with the implementation of [our] exclusive product lines such as the Shaver Lake and Sarah Bentley brands, which have proven popular among Gottschalks' customers. . . . Gottschalks anticipates private label sales will grow by 15 percent in 2003 to approximately $80 million, or nearly 12 percent of total sales, compared to 2002. A key component of this initiative is the expected launch of an exclusive new children's private label merchandise program this spring.”