Announcing job cuts right before the holidays is a Scrooge-like move, but the TJX Companies (TJX) just did it anyway. The discount clothing retailer said Friday it would consolidate its A.J. Wright division, converting its stores to those of its other brands or closing them, and cutting 4,400 jobs. The move will allow the company to focus on its larger, more profitable businesses that have major growth potential, it said.
Framingham, Mass.-based TJX said it will convert 91 A.J. Wright stores into T.J. Maxx, Marshalls or HomeGoods stores and close the remaining 71 stores, as well as A.J. Wright's two distribution centers and its home office.
"A critical factor in this decision is that, over the past two years, we have learned how to serve the A.J. Wright customer with our T.J. Maxx and Marshalls banners and have seen very strong performance from these stores in demographic markets similar to those in which we have A.J. Wright stores," said President and CEO Carol Meyrowitz.
While some 3,400 people will remain employed in the converted stores, in total, the company estimates that approximately 4,400 jobs will be eliminated across the U.S., about half of them part-time positions.
"While I believe this move makes us a much stronger company and will benefit TJX in both the near-term and long-term, it was not an easy decision, as many positions will be eliminated and it will be difficult for our affected Associates," Meyrowitz said.
TJX said the effected workers "will have the opportunity to be compensated at least through the holiday season, and most will remain employed through late January." TJX also said it "will be providing enhanced severance and other assistance following this period to help with the transition."
All 162 A.J. Wright stores will close between late January and the middle of February 2011. The 91 stores being converted will remain closed for eight weeks, after which they will reopen under their new banners.
TJX expects to incur estimated pre-tax costs related to the shutdown of the A.J. Wright brand in the range of $250 to $280 million, which would reduce net income by $150 to $170 million, or by 38 cents to 43 cents per share. The impact will continue to be negative throughout 2011, but TJX expects to start seeing positive results from the move in 2012.
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