Hayward, CA, September 8--Mervyns said it plans to close nearly a quarter of its stores and lay off 4,800 employees in an attempt to cut the chain's losses.
The company said it will close 62 stores in eight states, with the bulk of the cutbacks concentrated in Texas and Michigan. The streamlining also will close stores in Oklahoma, Colorado, Louisiana, California, Oregon and Utah, as well as two distribution centers in Texas and Utah. The closures will be completed by February.
All the affected stores, which generated just 17 percent of Mervyns' sales, were losing money, Mervyns said.
Mervyns has been steadily losing market share to more nimble competitors for years. Frustrated with the chain's meager returns, Target Corp. sold Mervyns last year for $1.65 billion to a group of investors that includes Sun Capital Partners, Inc., Cerberus Capital Management LP and Lubert-Adler and Klaff Partners LP.
About 1,200 full-time employees and 3,600 part-time workers will be laid off because of the closures, the company said.
After the shake up, Mervyns will be left with 193 stores in 10 states. The chain still hopes to open several new stores next year, Castagna said.
In Texas, Mervyns will close 28 of its 40 stores. The purge also will close: 15 stores in Michigan; 10 in Colorado; three in Oklahoma; three in Louisiana; and one each in Utah, Oregon and California.
