Wednesday, fashion retail company Saks Inc. (SKS), said it planned to discontinue the operations of its Club Libby Lu specialty store business, in order to focus more on its core Saks Fifth Avenue business. The closure process is expected to be complete by the end of the company's first fiscal quarter ending May 2, 2009.
New York-based Saks acquired Club Libby Lu in 2003, primarily to serve as a growth vehicle and traffic driver for its Saks Department Store Group or SDSG business, which has since been sold.
Steve Sadove, Chairman and Chief Executive Officer of Saks Incorporated, noted, "Club Libby Lu is an innovative concept that was a better strategic fit with our traditional department store business."
"Discontinuing the operations of Club Libby Lu is the appropriate decision so that we can focus 100% of our time and resources on executing the strategies of our core Saks Fifth Avenue business," he added.
Saks currently operates 78 Club Libby Lu stand-alone stores in malls nationwide and 20 Club Libby Lu store-in-stores within former SDSG stores. Club Libby Lu generated revenues of approximately $60 million for the fiscal year ended February 2, 2008.
Going forward, the company expects to record an after-tax non-cash charge of approximately $11 million in the third quarter ended November 1, 2008 related to fixed asset impairments, and after-tax charges of approximately $18 million to $27 million in the fourth quarter ending January 31, 2009 primarily related to $3 million of severance costs, and approximately $15 million to $24 million of costs associated with inventory liquidation, store closure, and lease termination costs.
The company anticipates that around $16 million to $25 million of the total charges will result in cash payments during the fourth quarter of fiscal 2008 and in fiscal year 2009.
SKS is currently trading at $5.80, down 3.17% or $0.19, on a volume of 291,080 shares on the NYSE.
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