FORT WORTH-Struggling home furnishings chain Bombay Co. will exit the BombayKIDS business by converting Kids/core combination stores to large Bombay units over the next 12 to 18 months, executives said at the company’s second-quarter conference call. The move is one part of a massive turnaround effort that also includes store closings and a migration from mall to off-mall locations.

Bombay, now with 472 stores nationwide, will open 13 new units through the end of the year, while closing approximately 30 stores, and converting 20 of its KIDS/core combination stores solely to the core format. By year-end, the company should have between 430 and 435 stores.

“Our exit from the KIDS business will be managed in an orderly phasing plan through the rest of this year, to avoid heavy inventory losses. It will lead to more productivity in the combo stores,” said David B. Stewart, CEO, who joined the company in June. “It will help us identify and focus on our core business.”

The remaining 40 Kids stores will be converted over the next 12 to 18 months. Bombay closed 13 stores while opening three in the last quarter, continuing its migration of store locations from malls to off-mall locations, said Elaine Crowley, CFO.

Some elements of the turnaround already have been implemented. Store clutter has been cleaned up and cash raised through a chainwide warehouse sale, Stewart said. In addition, merchandise presentation is being strengthened and refocused on key items such as jewelry boxes. Print media advertising was eliminated, and staffing reduced.

The chain reported revenues of $121.3 million for the three months ended July 29, 2006, down 5.3% from 2005. Comp-store sales for Bombay stores decreased 3.0% for the quarter. The chain posted a net loss of $19.9 million compared with a net loss of $9.4 million for the prior year.

“I believe that Bombay has the potential to return to a solid growth position and positive cash flow,” Stewart said. “But that will take work.”

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