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Future Availabilities Report: Toys R Us Won't Blame Disappointing Results on Declining Birth Rates

Also This Week, Levi Strauss Fitting the Firm to the Jeans; and Downsizings from: Quiznos, SuperValu, Walgreen, Wet Seal and Many Others
March 31, 2014
Struggling toy retailer Toys R Us Inc. outlined a new strategy last week to address what it termed "foundational issues" by implementing several new operational processes. The plan focuses on improving customer experience in-store and online, simplifying promotions and developing a clear pricing strategy.

As for its real estate impact, the strategy will also include some “right-sizing” of its cost structure.


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After acknowledging that its 2013 performance was disappointing, Antonio Urcelay, chairman and CEO of Wayne, NJ-based Toys R Us went on to say, "While this was partly driven by macro conditions, such as the decline in birth rates since 2007 which has contributed to stagnating overall toy and baby industry sales, and the rapid growth of online shopping, we cannot blame these factors."

Rather, Urcelay added, "Several execution issues also impacted these results.”

For 2014, the retailer will implement its "transformation strategy" to slow the sales decline, stabilize cash flow and improve EBITDA.

In addition, Urcelay said the company is in the middle of a “renewed assessment of its operations” and business structure to determine where greater efficiencies can be created and where additional resources can be allocated to help best serve customers.

As part of this evaluation, in a comprehensive review of functional areas throughout the organization, a number of opportunities were identified to streamline functions and reduce headcount.

In total, throughout its U.S. and International operations, Toys R Us Inc. has now eliminated more than 500 positions across all functions. The firm is continuing to evaluate its operations for additional cuts in personnel.

And though it has no plans at this time to close a significant number of stores, it may close some stores during the year primarily due to lease expirations.

It will however, close its McCarran Distribution Center in Storey County, NV, effective June 1. The toy retailer said the Nevada distribution center was no longer needed since the company has expanded its omni-channel capabilities and the ability to ship online orders from stores, resulting in the ability to flex inventory more efficiently.

The company said it will continue to open stores and expand fulfillment capabilities in markets where it makes the most sense, including in China where growth has accelerated.


Levi Strauss Fitting the Firm to the Jeans


Levi Strauss & Co. is undertaking a global productivity initiative over the next 12 to 18 months to generate cost savings of from $175 million to $200 million.

In this first phase, San Francisco-based jeans maker expects to eliminate 800 positions, or nearly 20% of its non-retail and non-manufacturing employee population.

The job eliminations reflect a reduction of management layers, the removal of duplicative roles, a regrouping of country clusters and other structural changes.

As the company continues to work through this initiative, it could also implement efficiencies across the company’s supply chain and distribution network and adopt lower-cost service-delivery models, the company said.


Facility Closures & Downsizings


Commercial Vehicle Group Inc. plans to close its interior trim production and warehouse facility in Tigard, OR at the end of this year. The closure will impact 80 employees.

International Game Technology in Las Vegas is enacting cost-cutting measures including the reduction of its global workforce by about 130 positions (7%). “As we reach the halfway point in our fiscal year, you can see this is a challenging time for the industry and IGT. We knew that our success in 2013 would be difficult to replicate. However, we did not expect such a sharp decline in North American gross gaming revenues, or further degradation in the international currency, compliance, and importation environment,” said Patti Hart, IGT CEO.

Quiznos, one of the nation’s largest quick-service restaurant chains, filed for Chapter 11 bankruptcy court reorganization. In doing so, the company plans to cancel leases on 24 of its eateries. All but seven of Quiznos’ nearly 2,100 restaurants are independently owned and operated by franchisees in the U.S. As separate businesses, these restaurants are not a part of the Chapter 11 proceedings.

SuperValu Inc. plans to streamline its independent business organization. As part of the new structure, SuperValu’s independent business will consolidate from three regions to two regions, forming new East and West teams. The new East and West independent business regions will be in Mechanicsville, VA, and Hopkins, MN. Initially, SuperValu anticipates reducing its employee workforce by approximately 200 positions throughout its independent business regional teams. The bulk of those cuts will come in Pleasant Prairie, WI, with the closure of its facility at 8401 W. 102nd St.

The Cato Corp., a Charlotte-based specialty retailer of value-priced fashion apparel and accessories, said it believes that 2014 could be another tough year for sales. The company expects to open 64 new stores during the year. The expected new store openings include 30 Cato stores, 24 Versona Accessories stores and 10 It’s Fashion stores. The company anticipates closing up to 17 stores by year-end. At this time, only four specific stores have been identified for closure.

Walgreen Co. approved a plan to close 76 underperforming stores across the chain - a little less than 1% of its store base. These stores are expected to close within approximately six months. The store closures will be spread pretty evenly across regions of the country. The average age of the stores to be closed is around 10 years, with about 70% in middle- to high-income market areas.

The Wet Seal Inc., a leading specialty retailer catering to young women, opened 13 and closed nine Wet Seal stores and also closed a pair of Arden B stores in the last quarter. It expects to open 10 new Wet Seal stores, primarily in outlet centers, and close 17 upon lease expiration this quarter.


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CompanyAddressCityStateClosure or LayoffNo. of LayoffsImpact Date

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Stonyfield Farm3810 Delta Fair Blvd.AntiochCAClosure584/1/2014

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McDonald's5725 Florence Ave.Bell GardensCAClosure694/21/2014

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Packers Sanitation Services57 East Shank RoadBrawleyCAClosure1114/10/2014

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JP Morgan Chase9200 Oakdale Ave.ChatsworthCALayoff1794/21/2014

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Senior Operations LLC5498 Vine St.ChinoCAClosure684/1/2014

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Bank of America2000 Clayton Road & 1655 Grant St.ConcordCALayoff714/13/2014

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Cooper B-Line.1375 Sampson Ave.CoronaCAClosure514/4/2014

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McDonald's8029 Atlantic Ave.CudahyCAClosure494/21/2014

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McDonald's3562 Katella Ave.Los AlamitosCAClosure904/21/2014

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Bank of America1000 W. Temple St.Los AngelesCALayoff574/13/2014

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Menzies Aviation Lax5619 W.Imperial HighwayLos AngelesCALayoff1024/1/2014

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Kohl's Department Stores855 BroadwayMillbraeCAClosure734/5/2014

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Bank of America35 N. Lake Ave.PasadenaCALayoff1534/13/2014

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Quad/Graphics3200 Pomona Blvd.PomonaCALayoff254/3/2014

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IFCO Systems US8950 Rochester Ave., Suite 150Rancho CucamongaCALayoff1594/21/2014

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Raleys110 Hartnell Ave.ReddingCAClosure614/26/2014

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Continental Maritime1995 Bay Front St.San DiegoCALayoff1524/18/2014

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San Diego Opera Association1200 3rd Ave.San DiegoCAClosure414/14/2014

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Bank of America1757 & 1800 Tapo Canyon RoadSimi ValleyCALayoff774/13/2014

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The Outdoor Channel43455 Business Park DriveTemeculaCAClosure454/11/2014

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AmgenOne Amgen Center DriveThousand OaksCALayoff2524/30/2014

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The Ritz-Carlton1303 Ritz-Carlton Highlands CourtTruckeeCALayoff2584/21/2014

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Wallenius Wilhelmsen Logistics Americus500 E. Water St.WilmingtonCALayoff1584/19/2014

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Hanjin Shipping America, LLC4300 North Point ParkwayAlpharettaGAUnknown1316/30/2014

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Timken3055 Torrington DriveBall GroundGAUnknown397/1/2014

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Sweet Breads, Natalie Janes, Sharkys129 E. Water St., 1424 Washington St., 1406 Washington St.ClarkesvilleGAUnknown26Immediately

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Shenanegans Pub87 N. Chestetee St.DahlonegaGAUnknown30Immediately

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Exelis6650 Meloy DriveFort BenningGAUnknown5505/4/2014

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Consolidated Transport Systems, Inc.2843 Highway 80 WestGarden CityGAUnknown453/31/2014

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Sanmina Corporation600 Tradeport Blvd.HapesvilleGAUnknown1137/31/2014

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Avon Protection Systems, Inc1322 Hurricane Shoals RoadLawrencevilleGAUnknown455/5/2014

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RR Donnelley100 Wallace St.MetterGAUnknown925/27/2014

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Office Depot6050 Oakbrook ParkwayNorcrossGAUnknown1185/23/2014

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Multi-Pack Solutions115 Manufacturers CourtWinderGAUnknown484/30/2014

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Clarcor Air Filtration Products1001 Sathers DrivePittstonPAClosure624/28/2014

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Sykes1361 Columbia Blvd.BloomsburgPAClosure795/2/2014

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QBE North America600 Lindbergh DriveCoraopolisPALayoff595/9/2014

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Osram Sylvania1128 Roosevelt Ave.YorkPAClosureNA7/1/2014



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