Woolworth Corp. said Thursday it is closing its five-and-dime stores across the country, ending a venerable 117-year-old business that has struggled to compete against big discounters.
Four hundred F.W. Woolworth stores will be closed and 9,200 employees will lose their jobs. There are no longer any Woolworth stores in Utah, the last of those stores closing in the late 1980s. Stores were once located in downtown Salt Lake City, Sugar House, Cottonwood Mall area, Roy, Provo, Price and Cedar City.Last year, the chain's F.W. Woolworth stores in the United States reported an operating loss of $37 million.
"This company has invested significant resources in trying to revitalize the F.W. Woolworth chain, including time, money and management's attention," Roger Farah, Woolworth chairman and chief executive, said in announcing the decision Thursday.
"However, despite our best efforts and the hard work of the F.W. Woolworth team, the business continued to lose money and it became clear that F.W. Woolworth would be unable, in the foreseeable future, to return to profitability as well as meet our minimum performance standards," he said.
F.W. Woolworth stores accounted for $1 billion of Woolworth Corp.'s annual sales of over $8 billion, but have failed to turn a profit. The remaining $7 billion comes from the chain's more profitable Foot Locker, Champs sporting goods, Northern Reflections apparel shops and other stores.
The company said that about a quarter of the F.W. Woolworth stores will be converted to Champs, Foot Locker and other shops. The only remaining Woolworth stores will be in Germany and Mexico.
In addition, the company plans to change its corporate name from Woolworth Corp. A new name will be announced later this year.
Costs associated with the closings will reduce after-tax earnings by $223 million, or $1.66 a share, in the second quarter.
Frank Woolworth created the company in 1879 when he added pricier 10-cent items to his "Great 5-Cent Store" in Lancaster, Pa. The stores boomed in prewar downtowns and became fixtures in suburban malls.
But in recent years, they lost customers to national discounters like Wal-Mart Stores Inc. and to the wide selections at stores such as Bed, Bath & Beyond and Toys "R" Us Inc.
"The 5-and-10 industry is defunct and has been defunct for at least 25 years," said Kurt Barnard, a retail consultant and president of Barnard's Retail Marketing Report. "It lost reason for its being, with discount and specialty stores taking over its function."