Leather goods chain will close 100 stores

Holiday sales disappoint

3 local Wilsons on list

January 24, 2004|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Wilsons The Leather Experts Inc. is closing 100 stores over the next three to four months, including three in the Baltimore area, after disappointing holiday sales.

Stores at Towson Town Center and Owings Mills mall in Baltimore County and Marley Station in Glen Burnie in Anne Arundel County are among those being shuttered. A spokeswoman for Wilsons said two other stores would close in Maryland but did not specify which among the 17 it operates in the state.

The Minnesota-based company will also lay off more than 1,000 workers at stores, at its corporate headquarters office in Brooklyn Park, Minn., and at two distribution centers to reduce costs.

The store closings just announced are in addition to 28 stores the retailer had already planned to close this month and 40 to 50 store leases that were scheduled to end this fiscal year. The chain will shrink by one-third to roughly 410 stores by summer from 598 now.

"The decision to take these actions, while very difficult, is the right move for the health of Wilsons leather," Joel Waller, Wilsons chief executive officer, said in a statement. "We expect the cost reduction initiative will enable us to reduce our working capital needs and strengthen our business."

The chain has lost money in eight of the past 10 quarters. Sales fell an average of 5.5 percent the past five quarters. After low December sales, the company asked for a waiver on financial covenants on its loans.

Sales in the five weeks that ended Jan. 3 fell 9.9 percent compared with the corresponding period a year earlier, to $165 million from $183 million. November sales were down nearly 20 percent compared with a year earlier, to $62 million from $77 million.

Wilsons' roots date to 1899 when Berman Brothers Fur and Wool Trading Company opened in Minnesota. Fifty years later, Wilson's House of Suede and Leather opened in Southern California. The two merged in 1989, according to Wilsons' Web site.

In recent months, Wilsons has been hurt by unseasonably warm fall weather and a drop in mall traffic during the holiday season as more shoppers flocked to discount stores, said Sarika Sahni, a retail analyst with Paul Dougherty & Co. in Minnesota.

Leather also wasn't as fashionable this year, she said.

"Leather typically works in cycles, and it's not a strong year for leather," Sahni said. "Even a lot of department stores have a lot of inventory that they're having to mark down and sell on clearance."

The company's other stores in the Baltimore area are at Eastpoint Mall and White Marsh Mall, both in Baltimore County; at Arundel Mills and Westfield Shoppingtown at Annapolis in Anne Arundel County and The Mall in Columbia in Howard County.

With the closings, the company said, it expects to take a pretax charge against earnings between $40 million and $50 million.

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