G&K Services, Inc announced that it has sold its direct sale program business. Separately, the company also divested its operation in Ireland, which was the company’s last remaining clean room business. Total proceeds from the sales were $6.6 million.
These transactions mark the completion of G&K’s restructuring efforts that began in 2009. Since that time the company has divested several non-core business units that did not fit its long-term strategy.
“These divestitures allow us to place even greater focus on our rental and direct sale catalog operations, where we see the company’s greatest opportunity for future growth,” said Douglas A. Milroy, Chief Executive Officer. “Looking ahead, we expect these transactions will improve G&K’s overall profit margins and return on invested capital and will move us another step closer to achieving the goals of our 12+ Plan.”
While the company is divesting its direct sale program business, G&K will continue to operate its direct sale catalog business, which provides a large selection of in-stock, ready-to-ship casual apparel, work-wear, outerwear, safety gear, and other products to meet the needs of its customers.
As a result of the transactions, G&K will recognize aggregate non-cash charges of approximately $13 million before taxes. In fiscal year 2013, these business units contributed total annual revenue of $42 million and adjusted operating income of approximately $500,000.
The company expects the divested businesses will be treated as discontinued operations in future financial reports. The company plans to update its fiscal year 2014 revenue and earnings guidance in conjunction with its second quarter earnings release, which is scheduled for January 28, 2014.
About G&K Services, Inc.
G&K Services, Inc. is a service-focused market leader of branded uniform and facility services programs in the United States, and is the largest such provider in Canada. Headquartered in Minneapolis, Minnesota, G&K Services has nearly 7,800 employees serving approximately 170,000 customers from 165 facilities in North America.