Leading off-price apparel chain Factory 2-U Stores Inc on Friday revealed plans to close almost two dozen loss-making stores in a move that will result in a one-time fourth quarter charge of about $13.2 million.

The California-based operator of 261 stores said it will close 12 immediately and another 11 outlets in fiscal 2003 as part of a major restructuring drive that will save it up to $5m.

It added as a result of the planned reduction in the store base and the imminent opening of a 600,000 square foot distribution centre in San Diego, it plans to consolidate both its distribution centre network and corporate overhead structure.

Chairman and CEO Bill Fields said: "These actions are necessary to allow us to improve operating results and offer better values to our customers. We will also reduce our inventory levels and change inventory mix and content.

"Our inventory liquidation efforts should improve inventory turns and ultimately improve the shopping experience in our stores. We have already begun to aggressively execute these initiatives, which we intend to serve as a foundation for future growth."