Saks Inc. is closing the 78-door Club Libby Lu tween specialty store business, which no longer fits its strategic model.
This story first appeared in the November 6, 2008 issue of WWD. Subscribe Today.
Saks has trimmed down in recent years to focus on its namesake business, selling its Parisian and Profitt’s/McRae’s businesses to Belk Inc. and its Northern Department Store Group to The Bon-Ton Stores Inc.
“Club Libby Lu is an innovative concept that was a better strategic fit with our traditional department store business,” said Stephen I. Sadove, chairman and chief executive officer of Saks. The chain was described as an experience-driven concept catering to VIPs, or “very important princesses” between ages four and 12.
In addition to the specialty stores, there are also 20 Club Libby Lu shop-in-shops at department stores previously owned by Saks. The business generated about $60 million in sales last year, Saks said.
“Discontinuing the operations of Club Libby Lu is the appropriate decision so that we can focus 100 percent of our time and resources on executing the strategies of our core Saks Fifth Avenue business,” Sadove said.
The shutdown, set to be completed by the end of Saks’ first quarter on May 2, will leave dark even more real estate in a market already struggling to fill space from store closings or bankruptcies. Wilsons The Leather Experts, Talbots and D.e.m.o. are just some of the specialty chains that have shuttered doors this year.
Club Libby Lu employs about 1,700 associates, who will be offered severance packages.
The closure will weigh on Saks’ earnings for the rest of this year and is expected to result in an after-tax noncash charge of about $11 million in the third quarter and after-tax charges ranging from $18 million to $27 million in the fourth quarter.
Saks acquired the mall-based chain in May 2003 from three owners for about $12 million when it had just 11 stores.
But the company began to focus more on its namesake luxe stores and by September 2005 there was speculation that the then 51-door chain would be sold. Potential bidders were said to include Forever 21, Too Inc., Claire’s and Build-A-Bear.
At the time, Saks was said to be looking for $40 million for the chain, but couldn’t put together a deal.