As part of a new business strategy, Mervyns is focusing on the high-growth West and Southwest markets and its strong profitable foundation of 193 stores in 10 states. Mervyns will increase its investment in existing store operations, information technology and infrastructure in California, Washington, Oregon, Idaho, Nevada, Utah, Arizona, New Mexico and parts of Colorado and Texas.

Mervyns will concentrate on its solid base of stores in the West and Southwest, and close 62 underperforming stores that represent a significant drain on the Company's overall profitability. The stores identified for closure have not been profitable in several years, and although they comprise approximately 25% of all Mervyns' stores, they represent only 17% of total sales.

As one of the first promotional neighborhood department stores, Mervyns understands the lifestyles and needs of busy families. The Company has a long and proud history of serving customers in the West and Southwest and will continue to satisfy their expectations by delivering a balanced assortment of the best quality national and private-label brands, timely fashion that is well-stocked, exceptional values and a convenient shopping experience.

“Concentrating resources on our stores in the West and Southwest will allow Mervyns to be more competitive and to serve our customers and communities better than ever,” said Vanessa Castagna, executive chairwoman of the Mervyns' board of directors. “The new business strategy will enable us to invest in the future, improve our merchandise, facilities and the overall value we offer shoppers. In fact, customers are already excited about the changes we have been making in our stores.”

Mervyns plans to invest in its core markets by making improvements to existing store operations, refurbishing stores, implementing new technology and systems throughout the company and other operational upgrades. In addition, Mervyns will also look for opportunities to open new stores in locations that will benefit its business, customers and the community.

“I've followed Mervyns closely over the years, and am proud of the fact that it is still synonymous with providing good value, giving back to the community and continues to be a great place to shop,” said Mervin Morris, founder of Mervyns. “The Company is in good hands with bright, talented professionals who really know the retail business, and I look forward to watching it grow.”

By February 2006, Mervyns will exit the Michigan and Oklahoma markets, and parts of Colorado, Louisiana and Texas. It will also close three stores, one each in Southern California, Oregon and Utah and two distribution centers, one each in Plano, Texas and West Valley, Utah. Until that time, these stores will continue operating as usual, with new merchandise arriving at the stores throughout the fall and holiday seasons.

A total of 1,200 full time and 3,600 part-time positions will be affected by the closures. All affected associates were notified this morning of the plan to close the stores. Associates will continue to be employed during the closing process, and Mervyns will offer job placement assistance and severance packages to eligible employees.