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Gateway shuts doors at four stores

Four Gateway Country stores close in a cost-cutting move that follows a warning that the PC maker would miss earnings targets.

Gateway closed four of its Gateway Country stores this week, in a cost-cutting move that follows a warning that the company would miss earnings targets this quarter.

The PC maker opted to shut down outlets in Encinitas, Calif., Fresno, Calif., Memphis, Tenn., and Spokane, Wash., after the performance of those stores failed to measure up to expectations, a Gateway representative said.

The four stores were the first to be assessed in a performance review of 100 Gateway retail locations that have leases ending either late last year or this year, the representative said. As the leases come up, Gateway may decide to renew them or to relocate or close stores, the representative added.

The Poway, Calif.-based company, which said earlier this month that it would reorganize operations to bolster its marketing strategy and later warned of a fourth-quarter earnings shortfall, pointed to store closings as one way to cut costs. Like all PC makers, Gateway was hit hard by the PC market slowdown that began during the fourth quarter of 2000.

Despite the closures, Gateway thinks its stores give it an important strategic advantage in selling PCs and consumer electronics, such as digital cameras, because it lets buyers go face-to-face with its inventory. The PC company has 268 stores in the United States, down from a high point of 326.

"We're making sure that the stores we keep open are optimized to compete in their markets," said Greg Lund, a Gateway spokesman.

Among its direct-sales PC rivals, Dell Computer is also working to have a greater retail presence with hands-on kiosks in shopping malls.

Last year, Gateway closed more than 20 of its stores in the United States, including two locations in Arkansas. It also pulled out of all international operations. However, the company has renewed between 85 percent to 90 percent of its store leases since 2001.

Of the four stores closed this week, the Encinitas and Memphis outlets are within about an hour's drive of other Gateway store locations. The four closings affected about 70 employees, who were offered the choice of taking a position elsewhere within the company or severance and job outplacement service.