No More Traveling

Wilsons The Leather Experts Inc. (Minneapolis) has announced that it will liquidate its travel subsidiaries and embark on a new operating strategy.

The 135 premium travel-related stores, selling luggage and accessories in 28 states and Puerto Rico, operated under the El Portal, Bentley's Luggage and California Luggage Outlet nameplates.

“It has become increasingly clear that the focus of our company, its management team, and its capital resources belongs squarely on the core Wilsons Leather business,” said ceo Joel Waller. “While our results for the quarter were disappointing to us, we are implementing a plan to return our company to its roots. We are executing a strategy that will focus primarily on store productivity, supply chain enhancement, and cash flow generation.”

Net sales for the 13-week period ended Nov. 2, 2002, decreased 5.9 percent. Consolidated comparable-store sales decreased 7.2 percent. Comparable-store sales for the Wilsons Leather stores declined 6.8 percent for the third quarter, while stores in the travel subsidiaries declined 8.9 percent.

Year-to-date comparable-store sales for the Wilsons Leather stores declined 5.5 percent, versus a prior-year decline of 7.3 percent. Year-to-date comparable-store sales for the travel subsidiaries declined 17.7 percent.

The company reported a third-quarter net loss of $17.0 million, which it believes is primarily the result of reduced revenue due to decreased mall traffic.

“At its peak level of productivity, Wilsons was a business that produced operating margins in excess of 11 percent and generated a 25 percent return on equity for its shareholders,” Waller said. “While we have been through an extraordinarily difficult time over the last 14 months, we are determined to put these difficulties behind us. The first necessary step is to exit the travel subsidiaries which have unduly compounded our difficulties.

“Our greatest opportunity for improving profitability is to maximize our franchise, leather apparel and related leather accessories, and minimize the forward risks to our business,” he continued. “This will be best achieved through a slowdown in the rate of store growth in favor of a transitional strategy that focuses on existing store productivity, thoughtful enhancements to our supply-chain management and the optimization and customization of our merchandise assortment. Through these initiatives, we believe we can rebuild our profitability and maximize our cash position.”

Wilsons operates about 630 leather-goods stores in the U.S. and Canada, with about 500 mall locations, 95 outlets, and 35 airport shops.