Mervyns’ New Business Plan

Mervyns LLC (Hayward, Calif.) has announced a new business strategy, focusing on the West and Southwest markets and its existing foundation of 193 stores in 10 states.

The mid-range department store retailer said it will increase its investment in existing store operations, information technology and infrastructure in California, Washington, Oregon, Idaho, Nevada, Utah, Arizona, New Mexico and parts of Colorado and Texas. It will also close 62 underperforming stores that it feels represent a significant drain on the company’s overall profitability. The stores identified for closure have not been profitable in several years, and although they comprise approximately 25 percent of all Mervyns’ stores, they represent only 17 percent of total sales.

By February 2006, Mervyns will have exited the Michigan and Oklahoma markets, and parts of Colorado, Louisiana and Texas. It will also close three stores, one each in Southern California, Oregon and Utah, and two distribution centers, one each in Plano, Texas, and West Valley, Utah. Until that time, these stores will continue operating as usual.

“Concentrating resources on our stores in the West and Southwest will allow Mervyns to be more competitive and to serve our customers and communities better than ever,” said executive chairwoman Vanessa Castagna. “The new business strategy will enable us to invest in the future, improve our merchandise, facilities and the overall value we offer shoppers. In fact, customers are already excited about the changes we have been making in our stores.”

Mervyns’ plans include making improvements to existing store operations, refurbishing stores, implementing new technology and systems throughout the company and other operational upgrades. In addition, it will look for opportunities to open new stores in locations that will benefit its business.

In 2004, former parent Target Corp. (Minneapolis) sold Mervyns to an investment consortium of Sun Capital Partners, Cerberus Capital and Lubert-Adler/Klaff.