Wilsons the Leather Experts Inc., the long-troubled retailer of leather coats and jackets, said Friday that it will close more than half of its mall stores nationwide and hang its future on designer handbags. The company also is saying goodbye to the Wilsons name at all mall stores.
The Brooklyn Park-based retail chain will shutter as many as 160 of its mall stores and transform the remaining 100 stores into accessories-only shops, which it will call Studio. None of the 110 outlet stores, which have been profitable, will be closed or changed.
About 938 store employees and 64 corporate workers will lose their jobs, according to a news release. Wilsons Leather declined to make a spokesperson available for comment, so it's unknown how many Twin Cities-area workers will be laid off. Six stores in Minnesota appear to be closing.
Retail observers say starting over without the Wilsons name may be the last chance for the struggling retailer to pull out of a death spiral that has seen its stock tumble from $23.50 in 2001 to 74 cents Friday.
"This is the final throw," said Eric Beder, an analyst with Brean Murray Carret & Co. in New York. "Either this is going to work, and you'll have created a viable accessories chain that has potential for significant margins of return -- or you've made your last shot, and the company isn't really relevant at all."
Wilsons Leather began testing the Studio concept at four stores around the country this fall, including one in Edina's Southdale Center, which will remain in place. The stores are dominated by handbags by designers such as Kathy Van Zeeland and Guess that sit in airy display cases under bright spotlights.
The leather coats and jackets that once defined Wilsons Leather stores make up just 20 percent of the Studio stores' merchandise mix, and none has a Wilsons Leather label.
Wilsons had been slashing prices on its Wilsons-branded coats and jackets in all of its 260 mall stores for the past six months to make room for proven brands such as Kenneth Cole, Calvin Klein and Nine West. But even that shift wasn't enough to draw holiday shoppers.
Sales at stores open at least a year, a key measure of a retailer's health, decreased 14.8 percent in January, compared with the previous year. In December, Wilsons reported a same-store sales loss of 12.5 percent.
Store managers were told of the aggressive cost-cutting moves in separate conference calls Thursday afternoon, depending on their fates, according to several store managers.
Managers said they were told that their severance packages would be tied to each store's performance during liquidation sales.
"They kept telling us things were starting to turn around for the better," said one manager of a closing store, who didn't want to be identified criticizing the company. "I came here hoping to spend my career here. Now, I'm left with nothing."
Studio stores will be opened at former Wilsons Leather shops at the airport, Mall of America in Bloomington, Eden Prairie Center, Ridgedale Shopping Center in Minnetonka and at Crossroads Center in St. Cloud.
Within the next three months, stores will be closed at Northtown Shopping Center in Blaine, Burnsville Center, River Hills Mall in Mankato, Apache Mall in Rochester, Rosedale Center in Roseville and Maplewood Mall, according to the stores.
Liquidation sales of 40 to 70 percent off began immediately, according to several managers.
With consumers pulling back spending in the wake of rising costs of food, fuel and housing, Wilsons may have a tough row to hoe as it attempts a turnaround.
"Putting out new concepts in this economic environment is really risky," Beder said. "But there's definitely a need for this middle-niche, accessories-only concept. There really are no stores that are doing it. So, if they can manage it right, they can succeed."
Jackie Crosby • 612-673-7335
