Service Merchandise Co. said it will close 60 stores and a distribution center, cutting as many as 3,300 full and part-time jobs, to reduce costs.
The closings are expected to result in a charge of about $80 million in the fiscal first quarter and perhaps cost another $29 million in the future, the catalog-showroom retailer said.
While the store closings and previous changes such as new store layouts and marketing will likely help the struggling retailer, fundamental problems such as increased competition may not be as easy to remedy, analysts said.
“The niche they had has been steadily eroding over the years,” said Mary Lou Burde, an analyst at Standard & Poor’s Corp.
Shares in Nashville, Tenn.-based Service Merchandise were unchanged at $3.50 on trading of 621,500, more than its three-month daily average of 552,990. The shares have fallen from a high of $14.50 in January 1993.
The closings, most of which are in the West, will leave Service Merchandise with 339 stores. Most of the closures and the sale of inventory will be completed by the end of the second quarter.