NEW YORK — Mervyns is exiting Oregon and Washington by closing the 19 stores in those states by February 2007.
The Hayward, Calif.-based promotional department store chain said most of the stores are low-volume units with relatively high operating costs, and have been dragging down profitability. A 20th store in Salt Lake City, Utah will also close.
The downsizing, leaving Mervyns with 170 units, will allow the chain to concentrate on existing and new stores in its profitable core markets, which are in Arizona, California, Colorado, Idaho, Nevada, New Mexico, Texas and Utah. The plan is in addition to a bigger downsizing announced last year involving eliminating 62 underperforming stores and trimming 4,800 jobs. Mervyns is privately owned by Cerberus Capital Management.
“Exiting the underperforming markets of Oregon and Washington will allow us to make investments that better serve our customers and Mervyns’ future,” Vanessa Castagna, executive chairwoman of Mervyns’ board, said in a statement Monday.
Mervyns has already begun a multimillion dollar investment in its core markets. Investments include opening new stores in key high-growth markets in 2006 and 2007, making improvements to existing store operations, refurbishing stores, installing new fixtures and other operational upgrades. In addition, over the next several years Mervyns will spend more than $100 million to implement state-of-the-art information technology systems and infrastructure.
Castagna said this level of investment — the company’s largest in more than a decade — will set the stage for sales growth and future expansion. “We’re especially pleased that our vendors and suppliers are also investing in our business,” Castagna said. “It demonstrates that they believe in our strategy and have confidence in our continued success.”