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Gottschalks plans to use proceeds from the $12 million sale to pay down debt, officials said. The company expects to record a pre-tax gain of about $8.7 million in the third quarter as a result of the sale.
"We continue to focus on better managing our real estate to maximize shareholder value," Jim Famalette, chairman and CEO of Gottschalks, said in a statement. "This transaction allows us to streamline our operations while also reducing our debt."
Gottschalks plans to sell the 105,000-square-foot store it owns in the mall and consolidate operations in the other 92,000-square-foot store it leases. The change will be made during the first half of 2009.
With the Antelope Valley Mall closure, the company will operate 58 stores.
Howard Davidowitz, chairman of Davidowitz & Associates Inc., a national retail consulting and investment banking firm in New York, said selling the Palmdale store is a positive move.
"This is significant because it helps Gottschalks' bottom line," Davidowitz said. "And when you are fighting for your life, you take certain steps, including cut expenses, reduce exposure and raise liquidity. And the sale of the store does those things."
Last week, Gottschalks reported that its same-store sales for August fell 11.1% compared with the same month last year, as the company battles a weak economy.
Gottschalks has seen same-store sales, or sales at stores open at least a year, fall for the past 18 months.
Total sales for the four-week period fell 13.3% to $37.2 million, compared with the same period last year, the company reported. Total sales for 2008 through the end of August fell 10.2% to $296 million, compared with the same period in 2007.
The reporter can be reached at brodriguez@fresnobee.com or (559) 441-6327.
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