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Avenue Sets 96 Store Closures

Move follows acquisition by Versa Capital Management.

Proceeding along the path outlined at the time of its February bankruptcy, plus-size specialty store Avenue Stores LLC plans over the next three months to close 96 stores and shrink its footprint to about 300 units.

United Retail Group Inc., Avenue’s former parent, filed a voluntary bankruptcy petition on Feb. 1 and in April was acquired by Versa Capital Management, which served as the stalking horse bidder during the bankruptcy process. United Retail said at the time of the filing that the company hoped to use the bankruptcy process to reduce the store count to about 300 units from the current 433.

“This kind of necessary step is always a difficult decision given the impact on employees and customers, but it is an important step in concluding our successful recent restructuring and will allow us to focus our resources,” said Elizabeth “Liz” Williams, who succeeded Dawn Robertson as chief executive officer of Avenue after the retailer was acquired by Versa.

Gregory Segall, ceo of Versa and chairman of Avenue, said in April that the company intended “to return to new store growth at the appropriate time.”

RELATED STORY: Bankrupt Avenue Seeks Store Closures >>

Sales in 2011 fell 4 percent to $300.6 million while the loss before interest, taxes, depreciation and amortization quadrupled to $28.1 million. United Retail owed former parent Redcats USA, a division of France’s PPR, $48.5 million under a “cash pooling arrangement.” Redcats opted in November to stop funding United Retail on an unsecured basis, precipitating the liquidity crisis that led to its insolvency.

The company declined to provide a list of stores slated for closure or to specify the number of employees affected by the moves. In February, Avenue had 4,128 store associates in the 433 stores. Similar staffing levels would put the job cuts at more than 900. The avenue.com Web site won’t be affected.

Several other plus-size chains have turned to store closures to reduce their expense and real estate exposure in a difficult market. Christopher & Banks late last year revealed plans to exit about 100 of its 761 doors, while Charming Shoppes Inc., the nation’s largest plus-size specialty retailer, had scheduled 90 to 105 store exits before the firm agreed earlier this month to be acquired by Ascena Retail Group. Williams is the former president of Charming Shoppes’ Fashion Bug division.