Topeka, KS — Collective Brands, Inc. will close approximately 475 under-performing stores in the next 3 years; 300 of these stores will close by year end.
Topeka, KS — As part of its efforts to optimize the performance of its Payless and Stride Rite store fleet, Collective Brands, Inc. will close approximately 475 under-performing and low-volume, non-strategic stores in the next 3 years with more than 300 of those closings coming by the end of this fiscal year. The company estimated that the costs for lease terminations, severance and other exit costs related to closing these stores could be in the range of $25 million to $35 million.
“While the second quarter was challenging for the company, we are taking aggressive actions to improve the business,” says Michael J. Massey, CEO of Collective Brands, Inc.
Net sales for Collective Brands in the second quarter increased 4.9% due to growth in three of its four segments: PLG Wholesale, Payless International and PLG Retail. Same store sales declined 0.7% due to the sales results in Payless Domestic.
Also during the second quarter, the company added 18 new stores (16 Payless and 2 PLG), closed 20 stores (19 Payless and 1 PLG), and relocated 14 stores (12 Payless and 2 PLG). The company also franchised stores in 14 countries and territories at the end of second quarter 2011. By year end, Payless and Stride Rite franchise locations are expected to total over 140 in 17 countries and territories. Sperry retail stores also will continue to grow.
Of the 475 underperforming stores expected to close within the next 3 years, approximately 400 of the stores are Payless stores in the U.S., Canada and Puerto Rico, and about 75 are Stride Rite Children’s locations. This year, the company expects to close more than 300 of those stores. Once these stores are closed, the company anticipates an annual improvement in operating profit of $18 million to $22 million including the benefit of estimated sales transfer to remaining locations from closed stores.
Collective Brands, Inc. is the holding company for Payless ShoeSource, Collective Brands Performance + Lifestyle Group, and Collective Licensing International. Payless ShoeSource is the largest specialty family footwear retailer in the Western Hemisphere.