Venator To Close 570 Stores
Venator Group Inc. moved to slash costs Wednesday in a restructuring plan that will close its Kinney Shoe and Footquarters chains and result in a $173 million third-quarter charge.
Excluding the charge, worth $1.28 a share, the company (Z) said it will earn from zero to 5 cents a share for the quarter ending Oct. 31. Wall Street analysts were expecting the company to earn 38 cents a share, according to Zacks Investment Research.
The news had little effect on the stock in early trading as shares of Venator, formerly known as Woolworth, edged up 1/4 to 10 13/16.Venator said it's closing its 467 Kinney Shoe stores and 103 Footquarters stores because they continue to bleed cash. In the six months ended Aug. 1, those operations lost $35 million on $207 million of sales. In 1997, those units lost $12 million on sales of $533 million before special items.
"Despite our best efforts and hard work, the specialty footwear business continued to operate at a loss," chief executive Roger Farah said. "After taking a hard look at the long term viability of the business, it became clear that these businesses would not be able to return to profitability in the near future, or meet our stated return on investment standards."
Venator said 60 of the Kinney and Footquarters locations will be transformed into Lady Foot Locker, Kids Foot Locker and Colorado formats. In addition, the company will create a new athletic outlet chain using about 35 Footquarters locations and 40 Foot Locker and Champs Sports outlet stores.
Venator plans to begin inventory liquidation sales immediately and expects to close the stores by the end of the year. Many of Kinney's and Footquarters approximately 1,400 full-time and 3,200 part-time employees will lose their jobs. The company will initiate other cost-reduction efforts as well.
The company also announced that its Foot Locker and Champs Sports divisions "have embarked on a major inventory reduction program to ensure its inventories remain current and in line with sales expectations for the upcoming important holiday seling season as well as to ensure it begins 1999 on plan."
Once these changes take place, Venator said, "full year restated income from continuing operations is now projected to be within the range of recent analyst expectations."
By Jeffry Bartash