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G & K Services To Cut Jobs, Close Plants

Maker of workplace uniforms said Tuesday it will close plants and cut jobs in a move to reduce costs amid a difficult economic environment.

MINNEAPOLIS (AP) -- G&K Services Inc., which makes and rents workplace uniforms, said Tuesday it will cut jobs and close plants in a move to reduce costs amid a difficult economic environment.

The company has closed or plans to close three processing plants and two branch locations, cut an undisclosed number of jobs at U.S. and Canadian corporate locations and outsource some plant functions.

The restructuring moves will cost $2.5 million and eventually result in pretax savings of about $3.5 million to $4.5 million, according to the company.

Minneapolis-based G&K said reductions in customer employment levels, higher energy costs and increasing prices for operating items such as textiles, freight and hangers are hurting results.

The company also increased its reserve for environmental matters by $4.5 million and established a reserve of about $3.5 million for recent changes in compensation laws.

Both changes will hurt fiscal first-quarter earnings by about 42 cents per share, and the company lowered its first-quarter guidance accordingly.

Shares of G&K Services lost $1.81, or 6 percent, to $28.20 in premarket activity. The stock has ranged from $28.07 to $44.46 over the past year.

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