Cuts Across the Boards for Yankee Candle

In step with a sagging economy, Yankee Candle today announced a restructuring plan involving the closing of the company’s 28 Illuminations retail stores and the discontinuance of the related Illuminations consumer direct business, the closing of one underperforming Yankee Candle retail store and limited reductions in the company’s corporate and administrative workforce.

The company expects to close the Illuminations stores by April 30, 2009. It acquired the Illuminations business in July 2006.

“Decisions like these which affect our employees are very difficult ones,”
said Craig Rydin, chairman and chief executive officer of Yankee Candle.  “But given this unprecedented macro-economic environment, particularly in the retail sector, we believe that this restructuring plan is necessary and appropriate as part of our ongoing efforts to reduce our cost structure, focus our resources primarily on our core Yankee Candle business, optimize our return on invested capital and increase our overall operating efficiency. 

The company expects to incur charges related to the restructuring plan of
approximately $18.0 million to $22.0 million in total, part of which will be
taken in the fourth quarter of fiscal 2008 and the remainder of which will be taken in the first quarter of 2009.  Approximately 50% of these charges are expected to be cash charges, consisting primarily of lease termination costs, employee severance payments, repayment of unamortized construction allowances, moving costs and other related expenses.  The remaining approximately 50% of the charges are non-cash items, consisting primarily of fixed asset write-offs and impairment charges relating to intangible assets. 

The restructuring plan will result in the termination of the employment of
approximately 330 employees of the company, including approximately 310 store
employees (which includes part-time and seasonal employees) and field
personnel in the Illuminations division, approximately 10 store employees (including part-time and seasonal) in the one Yankee Candle retail store to be closed, and approximately 12 corporate and administrative personnel in the company’s corporate headquarters.  All affected full and part-time employees are being offered a severance program.

“We believe that the actions we are announcing today, while difficult, are in
the best long-term interests of the company and its employees and
equity-holders,” Mr. Rydin continued.  “Looking ahead, we will continue to
carefully manage our cost and expense structure while also continuing to
invest in key strategic and growth initiatives to further leverage the
strength of the Yankee Candle brand.”

The company currently expects to complete all or substantially all of the activities associated with the restructuring plan by April 30, 2009.