The following is culled from a filing with the SEC on Monday, Feb. 22. A copy of the commercial real estate purchase and sale agreement can be found by clicking on the link at the end of this excerpt:
Item 1.01. Entry into a Material Definitive Agreement
On February 18, 2010, Zumiez Inc. (the “Company”) entered into a Purchase and Sale Agreement and Joint Escrow Instructions with Railroad Street Land Holdings, LLC (the “Purchase and Sale Agreement”) relating to the purchase by the Company of certain real property located in Corona, California for $11,790,000.
Item 2.05. Costs Associated with Exit or Disposal Activities.
On February 18, 2010, the Board of Directors of the Company approved the Company’s plan to relocate its distribution center from Everett, Washington to Corona, California with the signing of the Purchase and Sale Agreement.
The Company continually evaluates opportunities to reduce its supply chain complexity, lower costs and increase the speed to get inventory in its stores. The Company determined that it believes it can be more effective distributing its products through a distribution center located in Corona, California due to the fact that a majority of its vendors are located in the Southern California area. The Company believes it can increase the speed at which it gets inventory to its stores and can lower its freight and distribution costs by approximately $1 million annually once the new distribution center in Corona is running effectively and at full capacity. Distribution operations at the Everett, Washington facility are expected to cease by the end of April 2010.
The Company plans to acquire, on or about March 2, 2010, a 168,450 square feet Silver Certified Leadership in Energy and Environmental Design building, as certified by the U.S. Green Building Council as further defined in the Purchase and Sale Agreement. The Company plans to begin distributing merchandise out of this facility in late April 2010.
In conjunction with the plan to close the Everett, Washington distribution center, the Company expects to incur approximately $3.0 to $3.2 million in cash expenses. Such charges consist of approximately $1.7 to $1.9 million of severance and other employee related costs, $0.9 million in costs to exit 37,350 square feet of excess leased capacity at the Company’s home office in Everett, Washington and $0.4 million of other costs to exit the facility. Additionally, the Company expects to incur approximately $0.3 million of non-cash charges relating to accelerated depreciation.
To see the Purchase and Sale Agreement, click here.
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