TJX Companies Inc
The job cuts announced on Friday are equal to roughly 3 percent of TJX's global workforce.
We like that the company is getting rid of a concept which we thought would not be successful and has frustrated the Street for years in terms of lack of profitability and allocation of unproductive capital, Jefferies and Co analyst Randal Konik said in a research note.
In the first three quarters of fiscal year 2011, A.J. Wright, which was launched in 1998, accounted for $609 million in sales, or about 4 percent, of the company's total sales, and less than 1 percent of the profit from TJX's segments.
TJX will close 71 A.J. Wright stores and convert the remaining 91 locations into T.J. Maxx, Marshalls or HomeGoods stores, the company said.
The closures and conversions will take place in late January through the middle of February.
The company said $40 million to $50 million of the costs associated with closing the A.J. Wright stores will be in cash, with the rest coming from items like writing down the value of assets.
The total charge is equal to about 38 cents to 43 cents a share, the company said.
Additionally, the company also said it expected costs of about $12 million to $15 million to convert the 91 A.J. Wright stores into other brands.
TJX shares were unchanged at $44.96 in noon trading Friday on the New York Stock Exchange.
(Reporting by Jon Lentz; additional reporting by Brad Dorfman; Editing by Dave Zimmerman and Tim Dobbyn)