Gottschalks Inc. (Fresno, Calif.) has entered into an agreement to sell its wholly owned store in the Antelope Valley Mall (Palmdale, Calif.) to Forest City Enterprises, Cleveland-based real estate management and development company.
The retailer, which currently leases a second store within the same mall, will consolidate its two locations into this second store upon completion of the transaction. Gottschalks said the sale will allow it “to streamline operations and maximize shareholder value as part of [our] previously announced value improvement program.”
In 2006, the struggling regional department store chain formed a committee to review options, including the sale or merger of the company. In August 2007, it announced its VIP initiative, including a stepped-up new store opening schedule, a new marketing direction, enhancements to information technology systems and a plan to better utilize Gottschalks' owned real estate.
The sale is expected to be completed during the third quarter of 2008. Gottschalks expects to close the 105,000-square-foot wholly-owned store and consolidate it into its 92,000-square-foot location in the first half of 2009. It will use the proceeds from the sale to pay down debt and increase availability in its credit facility.
“This transaction allows us to streamline our operations and reduce our debt,” said chairman and ceo Jim Famalette.
The retailer had previously consolidated two Bakersfield, Calif., stores into one, a remodel that is expected to be completed this month. Following the Palmdale consolidation, Gottschalks will no longer operate two stores in the same shopping center in any of its markets.