The company did not specify which locations would close or how many jobs would be lost but said most of the closures are expected to occur by the end of the year with associated costs of $4 million to $8 million, about half of which will be due to lease terminations.
The cost-cutting measures come in response to a 3% decline in the company's third quarter income, which dropped to $15.4 million from $15.8 million during the same period a year earlier.
Driven by its new fragrances, total sales increased 7 % to $136.5 million during the quarter, company officials said, but less than expected revenue growth in its wholesale business and a more competitive promotional environment drove selling expenses up 9% to $34.8 million. The lackluster third quarter results were a disappointment for company officials.
"We have not met all of our expectations over the past year, "Craig Rydin, chairman and chief executive officer, told investors and analysts in a conference call Wednesday. Rydin said rising gas prices, a decline in consumer confidence and instability in the marketplace has prompted the company to adjust its fourth quarter guidance.
The company forecast fourth-quarter earnings of between $1.04 to $1.07, and full-year earnings between $1.77 to $1.81 per share. Analysts expect profits of $1.17 for the current quarter and $1.89 for the full year. Rydin said Yankee Candle also has developed a three year plan to solidify and leverage its brand, including a co-branding partnership with card maker Hallmark.
The company employs about 5,500 employees and operates 372 stores in 42 states. It also sells candles through catalogs and over the Internet.
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