The belt got even tighter at Venator Group Inc. today as the retailer formerly known as Woolworth took another stab at restructuring its troubled business by slashing about 3,700 jobs and closing 358 underperforming stores.
In recent years, the company has shuttered thousands of stores and sold many of its non-core divisions as it shifted its focus primarily to sporting goods.
"It is taking a while, but they are doing what they need to do to get this business in shape," said Lee Backus, senior vice president at Buckingham Research Group in New York. "I believe in the end they could emerge the winners in the sporting-goods market."
The retailer will cut about 30 percent of its sales and corporate staff in the United States and Canada. That includes about 600 corporate staffers and 3,100 people who work in its stores. About four of every five jobs eliminated will be in the United States.
Venator also will close 123 Foot Locker, Lady Foot Locker and Kids Foot Locker stores, 27 Champs Sports stores and 208 Northern Group clothing stores. That includes the disposal of all the Northern Getaway and Northern Elements stores in the United States.
Venator also said it will consolidate the management teams of its Kids and Lady Foot Locker stores.
Venator will take an after-tax charge against earnings in its fiscal fourth quarter of $53 million, or 39 cents a share, to cover the costs of the restructuring. But it said it expects the cutbacks to add $50 million a year to its pretax earnings, starting this year.
Venator stock closed at $6.50, up 12 1/2 cents, on the New York Stock Exchange. That's still substantially below the 52-week high of $12 reached in May.
In recent years, Venator has attempted to lift sagging profits by reducing costs and closing stores--including all of its Woolworth five-and-dime and Kinney Shoe stores.
Venator also has sold many of its businesses--including the accessories chain Afterthoughts and the Colorado Group of shoe and clothing stores in Australia--that weren't tied to its core sporting-goods divisions.
Venator now operates more than 4,000 stores, mostly under the Foot Locker and Champs Sports name.
Its efforts seem to be helping boost its bottom line. Venator's profits for its fiscal third quarter were $7 million (5 cents a share), compared with a loss of $155 million in the same quarter a year ago.
Still, analysts warn that Venator isn't out of trouble yet. The sporting-goods industry is a tough market, with shoppers buying far fewer sneakers and far less athletic apparel than they did in the mid-1990s.
Business: The former Woolworth Corp. operates about 4,000 specialty stores in North America, Europe, Australia and Asia.
Brand names: Foot Locker, Lady Foot Locker, Champs Sports, San Francisco Music Box, Eastbay Web site
Based: New York
Origins: Frank Woolworth opened his first five-and-dime in Lancaster, Pa., in 1879. Under a restructuring begun in 1993, the company focused its efforts on its specialty stores; its U.S. Woolworth stores were closed in 1997. The company changed its name to Venator Group in 1998.
1999 sales: $4.6 billion
1999 net loss: $136 million
Closing stock price: $6.50, up 12 1/2 cents
Ticker symbol: Z on the NYSE
Web address: www.venatorgroup.com
SOURCES: Hoover's, Bloomberg News