Woolworth to Lay Off 9,200, Close Stores

Frank Winfield Woolworth launched his retail empire 118 years ago on a foundation of nickels and dimes, but it was the dearth of millions of dollars that caused Woolworth Corp. to declare an end to the dime-store era on Thursday and announce the closure of the 400-store chain.

Woolworth said it will lay off 9,200 employees, change the venerable company name to something else and convert about 100 of the best locations into some of its more profitable chains, such as Foot Locker and Champs Sports.

Woolworth stores were a fixture on Main Street nationwide--the sort of place where one could buy a pet turtle and a hair net and then enjoy a grilled cheese sandwich and some cole slaw at the lunch counter. It was the way that Americans shopped for generations.

But the stores slowly became quaint, then dingy and rundown, as consumers forsook them for the bigger and arguably better offerings of major discount chains like Wal-Mart and K Mart--which themselves began as dime stores but adjusted with the times.

“Woolworth died long ago, it just wasn’t buried,” said Kurt Barnard, president of Barnard’s Retail Marketing Report in New York. “This is the finale of a company that has lost its reason for being.”

Only a handful of Woolworth stores remain in Southern California.

“Oh, it’s sad,” said Linda Brennen, 60, outside the North Hollywood Woolworth store, a shabby, poorly-lighted store in the Valley Plaza Mall on Laurel Canyon Boulevard where cheap T-shirts lie unfolded in heaps.

“I used to come here with my mom,” she said, where they would buy hair clips and other sundries and treat themselves to sodas and fries at the lunch counter.

“It’s the last little five-and-dime store,” said Allison Stubenhaus of Studio City. “You can find a lot of weird items you can’t find elsewhere.”

“It’s the last chain on earth that I thought would be closing,” said a 65-year-old man who declined to give his name. “That is a shame.”

The Woolworth stores themselves had dwindled in importance to the company, which gets most of its $8 billion in annual revenues from other chains, including Foot Locker, Lady Foot Locker, Kids Foot Locker, Champs Sports, Kinney shoes, Northern Reflections women’s clothing stores, the San Francisco Music Box Co. and the Going to the Game! sports clothing stores.

After the closings, the only remaining Woolworth stores will be in Germany and Mexico.

Frank Woolworth was the son of a potato farmer who opened a business called the Great Five Cent Store in Utica, N.Y., in 1879. It failed almost immediately.

Woolworth tried again that same year in Lancaster, Pa., opening another store where merchandise cost no more than a nickel. By the time he died in 1919, his company had blossomed to 1,081 F.W. Woolworth stores with annual sales of $119 million.

In 1913, President Woodrow Wilson pressed a button to turn on 80,000 light bulbs in the new Woolworth Tower in New York City, then the world’s tallest building at 792 feet and one inch.

The five-and-dime theme was faithfully observed until 1932, when Woolworth’s prices first rose above 10 cents. All price limits were removed in 1935.

In 1960, more history was made in the Woolworth in Greensboro, N.C. A group of black students staged a six-month sit-in at the store’s lunch counter to protest segregation. It was a landmark event in the fledging civil rights movement, and a concrete marker commemorated it. The store closed in 1993, and efforts began to turn it into a museum.

Meanwhile, the rise of suburban shopping centers and outlet malls in recent decades hurt the old five-and-dimes. Woolworth’s many imitators over the years--Kresge, Ben Franklin, McCrory and J.J. Newberry among them--have disappeared or shrunk to mere dozens of stores.

In the last decade, Woolworth had tinkered with its store mix, remodeled some locations, closed thousands of stores and slashed thousands of jobs. But the restructuring wasn’t enough to reduce losses and save the chain.

“They couldn’t overcome years and years of decay,” said Jay Meltzer, managing director of LJR Redbook Research, a retail analysis firm.

Woolworth’s fall was underscored when its stock was dropped from the Dow Jones industrial average on March 17, where it had been since 1925. On the New York Stock Exchange, Woolworth stock closed Thursday at $27.56 per share, up $2.50.

Woolworth stores lost $37 million last year on sales of about $1 billion, while Woolworth Corp. as a whole earned $169 million on sales of slightly more than $8 billion.

“Despite our best efforts and the hard work of the F.W. Woolworth team, the business continued to lose money and it became clear that F.W. Woolworth would be unable, in the foreseeable future, to return to profitability,” said Roger N. Farah, chairman and chief executive.

Costs associated with the closings will reduce the company’s earnings by $223 million, or $1.66 a share, in the second quarter.

Inevitable though it may have seemed to Wall Street, Thursday’s news shocked many loyal Woolworth customers.

“It’s another era gone,” said Florence Sorlie, 69, who recalled walking 18 blocks with her family to the Woolworth in South Bend, Ind.

“It was always a big deal to eat at the lunch counter,” Sorlie said outside the North Hollywood store, which removed its lunch counter years ago but still displays pictures of the sandwiches it used to serve. “You ate at Woolworth’s because it was affordable.”

The Woolworth memories embedded in the minds of an older generation were not shared by younger people.

“Why do they call it a five-and-dime store?” asked 19-year-old Eric Favad of Monterey Park, a clerk in the North Hollywood store who said he intends to find his next job in some other field.

And indeed, there was nothing on sale there for 5 or 10 cents. The cheapest items were four spools of polyester thread for $1 and two items for 99 cents--imitation bacon bits and packages of spicy nacho Doritos.

The sole remaining Woolworth in New Mexico is an institution in Santa Fe’s historic downtown plaza. It opened in 1935 and has since been surrounded by chic art galleries, cafes and high-end clothing shops.

“We get locals, we get tourists, we get movie stars,” said assistant manager Rosemary Madrid. “The mayor comes in all the time for her Frito Pie. Now where’s she going to go?”

In Chicago, long-time employees of the Woolworth on State Street grew teary-eyed on Thursday’s news.

“It’s so sad,” said Dorine, a 20-year employee who has worked at five Woolworth outlets, mostly at minimum wage, since she was 18.

“I just left a store they closed two years ago,” she said from behind a food counter as hot dogs rotated inside a nearby cooker.

“It’s almost like a family.”

Special correspondent Julia Scheeres and Times wire services contributed to this story.