Saks Inc. (SKS) is shutting down the unprofitable tween-girls chain Club Libby Lu, five years after buying the upstart business and three years after first exploring its potential sale.The chain, purchased in 2003 for $12 million, had 11 stores at the time and has since grown to 78 stand-alone shops and 20 locations within department stores once owned by Saks. Club Libby Lu's closure should be completed in six months.
Some 1,700 employees will be affected by the shutdown of the chain, which had nearly $60 million in sales for the year ended Feb. 2.
"Club Libby Lu is an innovative concept that was a better strategic fit with our traditional department-store business," said Chairman and Chief Executive Steve Sadove. He added the closure will allow Saks to put its complete attention on its Saks Fifth Avenue business.
Charges of about $11 million will be recorded for the fiscal third quarter ended Saturday, with another $18 million to $27 million in the current quarter.
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