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BIRMINGHAM, AL-Saks Inc. is closing eight of its Saks Fifth Avenue department stores and three of its Sakes Off Fifth outlets, most of them in California. The locally based company will shut most of the units in January. One of the eight department stores Saks is closing will be converted into an Off Fifth.

“After completing an extensive review of our store base, we are taking steps to rationalize our real estate portfolio to improve profitability,” says Saks chairman and CEO Fred Wilson in a statement. “These actions will permit our team to focus capital, inventory, and other resources on our most productive units and will further strengthen our brand.”

The stores Saks is closing represent 7% of the company’s total sf, but only 4% of its revenues at an annual total of $90 million, he says. Five of the department stores the company is shutting are in California, and New York and Texas each have one. Saks is closing an Off Fifths in Massachusetts, Pennsylvania and Tennessee. The Off Fifth it is converting into a department store is in Hilton Head, SC. After the closings, Saks will be left with 56 department stores and 52 Off Fifth units.

Saks leases all but one of the stores. The company owns the freestanding department store in Garden City, NY it is closing. Two of the department stores Saks is closing are in Simon Property Group malls–the North East Mall in Dallas and the Shops at Mission Viejo in California. The three Off Fifths are closing in outlet centers owned by Belz Enterprises, Cigna Investments and Prime Outlets. Saks will take a pre-tax charge of $35 million as a result of the closures, company officials say.

Katherine Galligan, a retail analyst at the Dallas-based Aperion Group, says the closures are a “favorable” move by Saks because of the small percentage of revenue they represent. “That suggests that these stores are significantly underperforming,” she says. “It’s better to go ahead an cut your losses if you have an underperforming store and you’ve done everything you can to try to turn it around.”

Galligan also says that closing the stores could further improve the company’s monthly comparable-store sales, which have has averaged an 8.7% year-over-year gain since March. “If you take out a slew of underperformers, the comps would have a better chance for improve numbers,” she says.

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