Brown Shoe Company announced plans to close its Perth, Ontario, manufacturing facility by early March 2004 in an effort to reduce costs and focus its Canadian operation on building market share for its Naturalizer brand.
As the percentage of lower-cost imported footwear in Canada has increased due to the reduction of tariffs, the company's Canadian manufacturing operation has become uncompetitive. Brown Shoe has been testing its imported, U.S.-designed Naturalizer product in its Canadian Naturalizer stores. This footwear, designed for a slightly younger, higher-fashion woman, tested well with Canadian consumers.
The plant employs 304 people and manufactures primarily women's dress and casual footwear and boots for the company's 170 Canadian Naturalizer stores and wholesale customers. The company will incur an aftertax charge of $3.8-$4.2 million, or $0.20-$0.22 per diluted share in its fourth-quarter net earnings in order to cover severance payments and the write-down of materials. The closing is expected to raise the Canadian division's gross margins and operating earnings in 2004 and beyond.
“This was a difficult decision for the company, and we recognize that many employees will be affected,” said Ken Gilbertson, President of the Canadian division. “Notwithstanding this we have made the right choice. This move will allow us to remain competitive in the women's footwear marketplace that is increasingly dominated by imported product.”
While the company plans to continue to operate its distribution center in Perth, which also is home to its Canadian wholesale headquarters, it will no longer own manufacturing facilities in North America. This move also follows the Company's December 2002 closing of its Stirling, Ontario manufacturing facility.
The company has committed to assisting its Perth-based employees during this transition. “We are working closely with the Ontario Ministry of Training, Colleges and Universities and Human Resources Development Canada to provide our Perth employees with a comprehensive labor adjustment program that includes a job center, vocational planning, job-search assistance and counseling,” said Gilbertson.
Brown Shoe has manufactured boots and sandals in the Perth facility since 1961, primarily under the Naturalizer label.
