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Wilsons Leather plans to close up to 160 mall locations
15
Feb '08
Wilsons The Leather Experts Inc announced that it will embark on a strategy aimed at reducing its mall store base, aggressive cost cutting initiatives, and the launch of a new accessories store concept. As part of this initiative, the Company plans to close up to 160 mall locations that do not fit its go forward strategy.

Concurrent with these closures, all remaining 100 stores in the mall division will be remodeled to a new "Studio" concept, which the Company has been testing since last fall in four different regions of the country.

This concept will be a brand driven store for women focusing on fashion accessories. Plans are to complete all 100 mall store remodels by August of this year. In this process, approximately 938 store-related positions will be affected. Wilsons Leather Outlet Division will not be affected by this new mall store initiative.

"The decision to take these actions, while very difficult, is the right move for the future of Wilsons Leather," said Mike Searles, Wilsons Leather's Chief Executive Officer.

"We expect the cost reduction initiative will enable us to reduce our working capital needs and strengthen our business, as well as provide capital for our remodel efforts to convert all remaining mall stores into our new "Studio" concept. Initial test results for the Accessories business in our new concept stores are very exciting and we look forward to rolling out this concept soon."

Wilsons Leather has begun discussions with landlords related to these store closings and anticipates the inventory liquidation process and resolution of lease termination costs to occur over the next 90 to 120 days. The Company has retained a third-party liquidator and real estate firm to assist in the process.

As part of the launch of the "Studio" concept stores and ongoing cost reduction efforts, the Company will realign the organization to reflect its reduced store base. As a result, the Company will eliminate 64 positions at its corporate headquarters, overseas offices and distribution center in Brooklyn Park, Minnesota.

In conjunction with the store closings, the Company's credit agreement has been amended to contain certain provisions relative to the store closings.

Wilsons The Leather Experts Inc


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