St. Louis, MO, July 30--May Department Stores said Wednesday it will close 32 of its Lord & Taylor stores in 15 states and two other stores under different names, leaving about 3,700 workers without jobs.
The targeted stores--representing 38 percent of Lord & Taylor's sites but just 19 percent of the company's sales--are in markets where Lord & Taylor lacked a major presence and generally had a small number of stores, the retailer said.
St. Louis-based May, pushing to focus on its core markets, will still have 54 Lord & Taylor stores in 11 states and the District of Columbia.
May also plans to close a Famous-Barr store in Des Moines, Iowa, and a Jones Store site in Omaha, Neb.
The company said it will take a charge of approximately $380 million, of which about $320 million--or 70 cents per share--will be recorded in this year's second quarter ending Saturday.
May said it expects the closures to produce annual savings of about $50 million, or 10 cents per share, of which $20 million will be realized in the second half of 2003.
In May, the company said its first-quarter earnings rose $2 million, though sales during that three-month period dropped to $2.87 billion from $3.10 billion a year ago.
"In evaluating our long-term strategic objectives, it is clear that Lord & Taylor's customers and May's are best served by concentrating our efforts and resources on those markets with strong performances," said Jane Elfers, president and chief executive of May's Lord & Taylor division.
Dates for the closings have not been decided, May spokeswoman Sharon Bateman said.
While calling the related charges "obviously a negative," analyst Jeff Stinson of FTN Midwest Research said the closings "long-term should be a net positive for the company.
"Any time you see a retailer taking a proactive step to shut down underperforming locations, it's a plus," Cleveland-based Stinson said. "Too many retailers hold onto underperforming assets too long. (In this case), the benefits to the company long-term are definitely a step in the right direction."
May said it would provide severance pay and enhanced retirement to eligible workers affected by Wednesday's announcement.
Last month, May said it laid off about 1,500 workers in sales management and support positions, amounting to about 1.3 percent of its overall work force.
In addition to Lord & Taylor, Famous-Barr and The Jones Store, May operates such stores as Filene's, Foley's, Hecht's, Kaufmann's, L.S. Ayres, Meier & Frank, Robinsons-May and Strawbridge's. The company also has 191 David's Bridal shops and 259 After Hours Formalwear sites.
May currently has 446 department stores in 45 states, the District of Columbia and Puerto Rico.
