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Blockbuster News: Video Rental Store Era Comes To an End

Also This Week in Closures & Downsizings: Snap, Crackle and Shut: Kellogg Serving Up 4-Year Consolidation Plan; Up to $600 Million in Cost Synergies Expected from Office Depot-OfficeMax Merger; Golf Retailer Could Close up to 50 Stores; Big Lots Closing Existing Wholesale Operations; Announced Job Cuts Up Slightly in October; and Closures and Downsizings in Texas and Pennsylvania
November 11, 2013
Once a retail mainstay, the video rental store era officially came to an end with the decision this week by Dish Network Corp. to shut down its remaining Blockbuster stores and end its mail DVD distribution operations by early-January 2014. The move will affect all 300 of the remaining U.S.-based retail stores, as well as its distribution centers.

"This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment,” said Joseph P. Clayton, Dish president and CEO. “Despite our closing of the physical distribution elements of the business, we continue to see value in the Blockbuster brand, and we expect to leverage that brand as we continue to expand our digital offerings.”


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Dish will retain licensing rights to the Blockbuster brand and key assets, including the company’s video library. It plans to refocus its business on delivering the Blockbuster @Home service to Dish customers, and on its Blockbuster On Demand streaming service.

The list of store closings has not yet been released.


Snap, Crackle and Shut: Kellogg Serving Up 4-Year Consolidation Plan


Kellogg Co. announced a four-year global efficiency and effectiveness program called Project K (not to be confused with its Special K cereal). As part of the plan, Kellogg will review its supply-chain operations and consolidate facilities to eliminate excess capacity.

Implementation of Project K, which is expected to be substantially completed by December 31, 2017, is projected to result in asset-related costs totaling $450 million to $500 million which will consist primarily of asset impairments and other exit-related costs; employee-related costs totaling $425 million to $475 million which will include severance, pension and other termination benefits; and other costs totaling $325 million to $425 million which will primarily consist of charges related to the design and implementation of global business capabilities.

As of February 2013, Kellogg’s manufacturing plants and distribution and warehousing facilities totaled more than 30 million square feet of building area in the United States and other countries. Its manufacturing facilities in the United States include four cereal plants and warehouses in Battle Creek, MI; Lancaster, PA; Memphis, TN; and Omaha, NE; and other plants or facilities in San Jose, CA; Atlanta, Augusta, Columbus, and Rome, GA; Chicago, IL; Seelyville, IN; Kansas City, KS; Florence, Louisville, and Pikeville, KY; Grand Rapids and Wyoming, MI; Blue Anchor, NJ; Cary and Charlotte, NC; Cincinnati and Zanesville, OH; Muncy, PA; Jackson and Rossville, TN; Clearfield, UT; and Allyn, WA.


Up to $600 Million in Cost Synergies Expected from Office Depot-OfficeMax Merger


Office Depot Inc. and OfficeMax Inc. completed their merger and the resulting new Office Depot, which would have had combined revenue for the 12 months ended Sept. 28, of $17 billion, now employs about 66,000 associates worldwide. The company serves consumers and businesses in 59 countries with more than 2,200 retail stores.

Total estimated annual cost synergies projected to be achieved over the next three years are now expected to be in the upper half of the previously estimated $400 million to $600 million range. This excludes any potential synergies from approximately $2 billion of other operating expenses related to retail stores that have not yet been evaluated, as well as any potential working capital savings that may result from vendor or supply chain facility consolidation.

The company will continue to operate in both Boca Raton, FL, and Naperville, IL, until a new CEO is on board. It then expects to make a decision on a headquarters location.


Golf Retailer Could Close up to 50 Stores


Edwin Watts Golf Shops LLC (an affiliated portfolio company of Sun Capital Partners Inc.), based in Fort Walton Beach, FL, filed for Chapter 11 bankruptcy protection this past week. In its bankruptcy, the golf equipment retailer with 90 stores in 15 states disclosed it is looking to sell itself to GWNE Inc., a subsidiary of Worldwide Golf.

As part of that plan, Edwin Watts asked for court approval for several sale procedures, including the minimum sale of 40 stores to GWNE. Potential store locations have not been identified. The majority of stores are between 6,000 square feet and 15,000 square feet with an average size of 9,000 square feet.

Hilco Merchant Resources will handle liquidation of store assets and leases for stores would be closed under court proceedings.

The stores GWNE would acquire will continue to be operated under the Edwin Watts Golf Shop name. GWNE completed a similar deal in 2009 when it acquired the operations of Golfers’ Warehouse Inc. out of bankruptcy.


Big Lots Closing Existing Wholesale Operations


Big Lots Inc. intends to close its Big Lots Wholesale, Consolidated International, and Wisconsin Toy wholesale operations by the end of fiscal 2013. The wholesale business expects to liquidate its inventory and its associates will be assimilated into its retail operations during the next 90 days where and when possible.

Its wholesale operations have major showrooms at the following locations:
300 Phillipi Road, Building 550, Columbus OH, a 2.4 million-square-foot industrial warehouse building built in 1955;
9555 Foster Ave., Suite 590, Schiller Park IL;
Toy Center North, 230 5th Ave., Suite 310, New York NY; and
75 McNeil Way, Dedham MA.


Announced Job Cuts Up Slightly in October


The pace of downsizing remained relatively flat in October, as the nation’s employers announced plans to cut 45,730 jobs from their payrolls during the month. That was up 13.5% from 40,289 job cuts recorded in September, according to the latest report on monthly job cuts released by global outplacement consultancy Challenger, Gray & Christmas Inc.

The October job-cut total was down 4.2% from the same month a year ago, when 47,724 planned cuts were announced. This marks the first time in five months that the job-cut total was lower than the comparable period a year ago.

The pharmaceutical industry saw the heaviest job cutting in October, with 10,585 job cuts announced.

Second to the pharmaceutical industry in October job cuts was the financial sector, which announced 8,717 job cuts during the month.


Facility Closures & Downsizings




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CompanyAddressCityStateClosure or LayoffNo. of LayoffsImpact Date

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Westfield Hospital and Westfield Surgery Center4815-4825 W. Tilghman St.AllentownPALayoff7012/13/2013

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Kloeckner Metals Corp.555 State RoadBensalemPAClosure69Immediately

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NRG Energy296 Poplar Neck RoadBirdsboroPALayoff43Immediately

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Pennsylvania Mentor450 Parkway Drive, Suite 204BroomallPALayoff501/1/2014

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Pennsylvania Mentor450 Parkway Drive, Suite 204BroomallPALayoff501/1/2014

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American Bridge1000 American Bridge WayCoraopolisPALayoff7712/9/2013

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Pennsylvania Mentor311 East Main StreetFleet WoodPALayoff501/1/2014

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General Nutrition Cos.Buncher Commerce Park - Bldg #15ALeetsdalePAClosure60Immediately

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Best Western Center City Hotel501 N. 22nd StreetPhiladelphiaPAClosure5612/1/2013

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Pennsylvania Mentor10601 Decatur Rd, Suite 300PhiladelphiaPALayoff501/1/2014

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JC's 5 Star Outlet3050 N. 5th StreetReadingPAClosure6611/30/2013

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Merck & Co.770 Sumneytown PikeWest PointPALayoff50012/23/2013

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Travelocity.com1061 Hanover StreetWilkes-BarrePALayoff7712/13/2013

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Convergys Customer Management Group935 N. Frontage Road 77BrownsvilleTXClosure3621/21/2014

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US Foods10 S. Trade Center PkwyConroeTXClosure8412/31/2013

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Precision Camera11500 Roajs DriveEl PasoTXLayoff3212/24/2013

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State Farm Insurance1945 Northwestern DriveEl PasoTXClosure16212/20/2013

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The Eureka Co. dba Electrolux9600 Pan American DriveEl PasoTXClosure7212/15/2013

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Visiting Nurses Association4171 N. Mesa, Bldg. D, Suite 500El PasoTXLayoff84512/1/2013

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Wells Fargo and Co.250 E. John Carperter HighwayIrvingTXLayoff12512/15/2013

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Caterpillar3007 Maverick DriveKilgoreTXClosure4112/20/2013

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Green Field Energy Services12914 W. County Road 91OdessaTXLayoff1109/30/2013

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Travelocity11603 Crosswinds Way, Suite 125San AntonioTXLayoff6212/13/2013

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Trinity Mining & Construction Equipment647 N WW White RoadSan AntonioTXClosure8612/10/2013

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Dr Pepper Snapple Group21500 Springwest DriveSpringTXClosure11212/6/2013



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