Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Charges for the closings and other operational changes are expected to approach $74 million.
Discount chain retailer BJ’s Wholesale Club Inc. will close five underperforming clubs by the end of this month, and will restructure its home office and certain field operations. The actions are part of a new strategy to improve operations, the company announced this week.
Of the five clubs slated for closing, three are in the Atlanta area, one in Sunrise, FL, and one in Charlotte, NC. The closures will leave BJ’s, No. 459 in the Internet Retailer Top 500 Guide, with 189 clubs in the Eastern U.S., along with its e-commerce site, BJs.com.
The moves come after several months devoted to developing a new strategic plan, says Laura J. Sen, CEO, “to optimize our performance and build for the future, thereby enhancing shareholder value.” The savings associated with the actions will be invested in new clubs, remodeling and information technology, with the aim of improving competitiveness, future growth and profitability, she says.
The company anticipates pre-tax expenses associated with the club closures will be approximately $44 million to $46 million, consisting of about $43 million of lease termination and facility closure-related costs, and about $2 million in severance costs.
Additional pre-tax charges related to a restructuring of its home office and impairment charges on certain of its remaining clubs, as well as for the costs related to management changes, are estimated to range from $26 million to $28 million.
Management changes announced this week include Robert W. Eddy being named executive vice president and chief financial officer and Cornel Catuna promoted to executive vice president of club operations. Eddy formerly was senior vice president and director of finance and Catuna was senior vice president of field operations. The changes will be effective on Jan. 30.
The promotions follow the retirements of Frank Forward, executive vice president and CFO, and Thomas F. Gallagher, executive vice president of club operations, both effective Jan. 29. Forward’s retirement has been planned since 2007 when Eddy joined BJ’s to help manage the finance division. Gallagher is retiring for health reasons, the company says.
For the third quarter ended Oct. 30, BJ’s reported:
- Sales of $2.57 billion, up by about 4.8% from $2.45 billion in the prior year period. The company did not break out online sales.
- Comparable-store sales, excluding gasoline, were up by 1.5%.
- Net income of $23.0 million, a 32.2% increase from net income of $17.4 million in the previous year.
For the first nine months of fiscal 2010, BJ’s reported:
- Sales of $7.84 billion, up by 8.6% from $7.22 billion in the prior year period. The company did not break out online sales.
- Comparable-store sales, excluding gasoline, were up by 2.8%.
Net income of $84.8 million, a 10.6% increase from net income of $76.7 million in 2009.