Christopher & Banks to close down 100 stores
Christopher & Banks Corporation, a specialty women's apparel retailer, announced that the Company's Board of Directors, after reviewing the results of an in-depth analysis of the Company's store portfolio, authorized plans to close approximately 100 stores, almost all of which are underperforming, with a significant majority targeted for completion by the end of January, 2012.
As part of the Company's overall real estate strategy, the Company also will seek to restructure the occupancy costs of a majority of its remaining stores. In addition, the Company intends to accelerate its plans to convert or consolidate a number of its existing Christopher & Banks and CJ Banks stores into dual format stores.
The Company also announced that effective October 28, 2011 it implemented a workforce reduction involving its home office and field management organization.
The anticipated store closing expenses primarily consist of cash charges of $5 million to $7 million attributable to estimated lease termination liabilities and severance costs, and non-cash asset impairment charges of $7 million to $9 million. The Company anticipates pre-tax expenses associated with the closing of the approximately 100 stores to range from approximately $12 million to $16 million in the aggregate over the next three fiscal quarters.
In addition, the Company anticipates taking a non-cash impairment charge of approximately $2 million in the third fiscal quarter associated with its remaining store base. On an after-tax basis, the charges associated with the store closings and the non-cash impairment charge for existing stores are expected to range in the aggregate from $0.39 to $0.49 per diluted share over the next three fiscal quarters, based on an effective tax rate in the low single digits.
For the third quarter of fiscal 2012, the Company expects to record a charge of approximately $0.01 per diluted share associated with the workforce reduction implemented on October 28, 2011. The above expenses and charges were not included in the Company's business outlook for fiscal 2012, provided on October 5, 2011.
Larry Barenbaum, President and Chief Executive Officer, said, "We have conducted an in-depth assessment of our store portfolio, which included an analysis of the portfolio by RCS Real Estate Advisors. Following that assessment, we have made the strategic decision to close approximately 100 stores.
"As part of our go-forward real estate strategy, we also intend to restructure overall occupancy costs at a majority of our remaining stores and to accelerate the conversion of a number of our existing stores to a dual store format, which offers missy, petite and plus sizes under one roof. We anticipate that these initiatives will help us to both improve overall store productivity and support our return to profitability."
Mr. Barenbaum continued, "We recently made the decision to reduce the size of our labor force. We thank the affected employees for their efforts and dedication. As we prepare for the next fiscal year, we continue to evaluate our cost structure and capital expenditure requirements and we will remain focused on carefully managing expenses and inventories, as well as preserving our cash."