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MINNEAPOLIS --Nash Finch Co., a national food retailer and distributor, today announced that it will close 21 stores, including five Buy n Save outlets, and three Avanza outlets located in Chicago and Pueblo, Colo.
At this time the company intends to seek purchasers for its three Denver-area Avanza stores. It will also close 10 conventional outlets, primarily operating under the EconoFoods banner.
The 21 stores involved represent about 15 percent of the company's annualized retail sales, and about 3 percent of its total annualized sales. The company expects that the store closures will be completed by the end of its second fiscal quarter.
The company said that it has determined that prospects for improvement at these locations and formats within an acceptable time frame aren't sufficient to justify continued investment. Exiting these underperforming assets is consistent with Nash Finch's commitment to continue to lower operating costs, improve its balance sheet, and focus investment and attention on core areas of its business that offer a better return to shareholders, according to the company.
As a result of the closures, the company expects to realize an annualized improvement to pretax earnings of about $16 million. The annualized improvement to Consolidated EBITDA, net of future lease-related payments, is expected to be about $6 million. Nash Finch also expects to incur pretax charges in the second quarter of 2004 totaling about $42 million, the vast majority of which represents asset impairment charges and provisions for future lease costs.
Cash generated by the sale of inventory and other assets is expected to exceed the cash outflows associated with the closures. The stores involved in these actions are served by four of the company's 15 distribution centers and don't represent a material portion of the volume or profit of any of those distribution centers.