Cost Plus to Close 26 Stores and Cut Jobs

Oakland, Calif. -- Cost Plus (CPWM Quote) announced plans to close 26 stores and cut jobs on Friday in an effort to save about $21 million a year, after the specialty home retailer reported weak holiday sales.

The Oakland, Calif.-based company also plans to exit eight media markets. Cost Plus did not identify those markets or the stores to be closed.

The company will also cut 18% of the staff in its home office and distribution center. Cost Plus had 808 corporate office and distribution employees as of Feb. 2, according to a Securities and Exchange Commission filing. The company had 2,719 full-time and 3,986 part-time employees at the time.

Cost Plus did not disclose how many employees would be affected by the store closures.

The company expects its action to save about $21 million a year starting in fiscal 2009.

Cost Plus also said its same-store sales fell 4.3% in December and 6.6% for the nine-week holiday period ended Jan. 3.

Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance because they measure growth at existing stores rather than newly opened ones.

The company expects to book a fourth-quarter pretax impairment charge of roughly $4 million in fiscal 2008 to write down assets related to the store closures and $2 million in severance costs.

During fiscal 2009, Cost Plus expects to book an additional pretax charge of about $23 million for other costs related to the closures. The company expects to bring in about $19 million in cash receipts from inventory sales at the closing stores.