Byline: Thomas Cunningham

NEW YORK — In an about face, outerwear maker The North Face Inc. said Friday it will close its Carbondale, Colo. facility and consolidate its corporate headquarters in San Leandro, Calif.
The move affects 70 employees in marketing, research design and development, product acquisition and sales, as well as its executive staff. North Face will take charges of $3.5 million in the fourth quarter of 1999 and the first quarter of 2000 for the relocation. Those charges come on top of charges North Face took last year and into this year as it moved part of its headquarters from California to Colorado.
“At this time, the expense of maintaining two operating facilities is having an adverse impact on our overall costs structure and ability to operate efficiently,” said Geoffrey Lurie, a turnaround expert who became North Face’s chief executive last month, said in a statement. “Consolidating our corporate operations into one location will eliminate redundant expenses and provide a more controlled and focused approach to managing the business.”
In January, North Face paid stock with a market value of $2.5 million for land in Carbondale. But the company never built a headquarters on the 36-acre property, instead leasing a facility that it will now vacate, according to a company spokeswoman. North Face has donated some of the land to a not-for-profit agency and sold part of it for use as athletic fields, leaving the company with 24 acres in Carbondale, she said.
James Fifield, North Face’s former president and chief executive, decided to move the company’s headquarters to Carbondale, close to his Aspen home, shortly after he took the top jobs in May 1998. But in September, Fifield gave up the executive positions after his plan to take the company private unravelled when accounting errors forced North Face to restate its 1997 and 1998 financial statements downward by $9 million.
The move to Carbondale, expenses related to the failed buyout, management severance costs and costs related to North Face’s shift to an outside distributor in the U.S., have damaged the company’s bottom line. For the nine months ended Sept. 30, North Face lost $23.7 million against profits of $3.8 million, or 31 cents a share, a year earlier. Sales slipped 3.1 percent to $176.9 million from $182.5 million.
Difficulties with the outside distributor, which North Face started using in July, helped drag down U.S. wholesale volume by 18.4 percent, North Face said in a form 10Q filed with the Securities & Exchange Commission late last month. On the plus side, European wholesale sales, La Sportiva USA sales and retail sales were all higher in the period, North Face told the SEC.

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