Venator Store Closings Will Hit 33 Kinney Shoe Shops in S. California
Financially troubled Venator Group Inc. said Wednesday it will close its 570 Kinney and Foot-quarters shoe stores by the end of the year to focus its resources on its athletic shoe chains.
The move will affect about 230 employees at the 33 Kinney stores in Southern California. Venator, formerly known as Woolworth Corp., has no Footquarters stores in California but has 65 Kinney stores statewide.
Nationwide, Kinney and Foot-quarters have a combined work force of about 4,600. Venator said some employees would be discharged and some would be offered other jobs within the company. Venator plans to convert 60 of the closed stores to Lady Foot Locker, Kids Foot Locker and Colorado stores, which sell sports and outdoor footwear and apparel. It is turning about 35 locations into a new athletic outlet chain.
New York-based Venator, which also operates the Foot Locker chain, made the announcement 14 months after closing its 400 Woolworth dime stores. Costs associated with that shutdown contributed to Venator’s net loss of $180 million during the first half of 1997. However, Venator’s woes continued this year as it suffered a loss of $18 million for the first six months.
Kinney, which sells moderately priced footwear, and Footquarters, a discount shoe chain with 103 stores, both have been unprofitable, said Venator Chairman Roger Farah.
“After taking a hard look at the long-term viability of the business,” Farah said, “it became clear that these businesses would not be able to return to profitability in the near future or meet our stated return on investment standards.”
Industry analysts said the closures are necessary because Venator must direct more of its resources to making improvements in an athletic shoe market that has experienced industrywide sales declines.
“This is a last-ditch effort to save a badly faltering company,” said Kurt Barnard, a New Jersey-based retail economist. “They are now committed to athletic footwear, and the competition in that market is ferocious.”
Unlike many other retail sectors, the athletic store business has large regional chains as well as national operators.
Venator sought to gain a competitive edge by engineering an agreement in May to merge with Sports Authority Inc.
However, that deal allowed Sports Authority to walk away from the agreement if Venator’s stock price was not at least $20.50 during specific periods. Venator canceled the deal last week because a 61% drop in the value of its stock had dramatically reduced the value of its merger offer.
Other athletic store chains have also made consolidation bids. Gart Sports Co., the Denver-based company controlled by Los Angeles investor Leonard Green, announced a rival bid for Sports Authority in July. Gart operates Sportmart and other chains. Sports Authority rejected the Gart bid last month.
Venator said it expects its store closings to result in an after-tax charge of about $173 million in its third quarter. Venator shares fell 13 cents Wednesday to $10.44 on the New York Stock Exchange.
