By  on May 9, 2006

NEW YORK — After going private and enduring massive downsizing, Mervyns is back in the business of growth.

The Hayward, Calif., promotional chain will open four stores in October, in San Jose and National City, Calif.; Gilbert, Ariz., and Brownsville, Tex., to further its concentration in the West and Southwest. About 150 associates will be hired at each location.

Additional store openings are expected to be announced soon.

"We are definitely opening more stores," said Vanessa Castagna, executive chairwoman of Mervyns' board. "We haven't announced the others yet, but we are finalizing site selections for '07 and '08."

It's been about three-and-a-half years since Mervyns opened a store, and store closings are ongoing. There are 17 set to be shuttered this year, primarily in the Pacific Northwest, bringing the chain down to around 170 units by the end of the year. The closings were previously announced.

Castagna said upcoming stores will be in "core markets where we dominate." She cited "all of Cali­fornia, south Texas, the Las Vegas area, and Albuquerque, N.M.," among the areas where Mer­vyns will attempt to strengthen its presence. Mervyns also considers parts of Arizona to be critical.

Castagna said the new stores will be in the 80,000- to 85,000-square-foot range, which, she said, is the ideal size for Mervyns.

In its announcement Monday, the company said the stores will feature "a more open, modern and brighter format as well as state-of-the-art fixtures and wider shopping aisles. These enhancements will provide customers with an increased product assortment so that they can find all the must-have basics and trend-right merchandise in the sizes, colors and quantities they want."

Mervyns has earmarked "several-hundred-million dollars through 2007," its biggest investment in more than a decade for store refurbishments, high-capacity fixtures, upgraded lighting, new technology, supply chain improvements, and other operational upgrades company-wide.

"During the past several months, we've made significant investments to our infrastructure and to our merchandise assortment, which will enhance the overall shopping experience and value we offer our customers. We are committed to growing in our West and Southwest core markets — and having the right stores in the right locations, which will allow us to better serve our customers," Castagna said in a statement. She added that "Mervyns has delivered strong performance over the past several months and continues to build solid momentum in our core markets."The $3 billion Mervyns has 187 locations in 10 states, including 125 in California, primarily competing with Kohl's, J.C. Penney, Wal-Mart and Target. It is owned by an investment consortium led by Sun Capital Partners Inc., Cerberus Capital Management LP and Lubert-Adler/Klaff and Partners LP. The consortium bought the company from Target Corp. for $1.2 billion.

Under Target, the chain suffered from neglect, intensifying competition and many weak locations. The Target discount division received the lion's share of capital to feed that discounter's growth.

When the investment group bought the chain, Mervyns operated 257 stores in 13 states, mostly in the West and South. Stores closings so far have mostly occurred in Michigan, Oklahoma, Colorado, Louisiana, Oregon, Washington and Texas. About 6,200 associates have been let go.

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