Portrait to close 500 Wal-Mart studios

WASHINGTON --Portrait Corp. of America has reached a deal with Wal-Mart Stores Inc. to close 500 of its photography-studio locations housed by the mega-retailer.

The 500 portrait studios, which lost $1.7 million in 2006, are a "drain" on the company, PCA said in court papers filed Friday.

PCA is asking the U.S. Bankruptcy Court Court in White Plains, N.Y., to approve a new contract with Wal-Mart, calling it "the cornerstone of its reorganization." If approved, 1,250 of PCA's 7,500 employees will lose their jobs.

PCA said it expects the closures will save it $8 million in labor and manufacturing costs in 2007. Wal-Mart has said it won't seek damages if the new contract is approved.

The judge overseeing PCA's case is scheduled to rule on the contract at a Tuesday hearing.

According to court papers, the furniture, computers and other equipment from the closed portrait studios will replace older materials used in the locations that will remain in business.

All of PCA's North American portrait studios are located in Wal-Mart stores and operate under the Wal-Mart name, making the photography firm heavily dependent on the relationship with the retail chain, PCA has said in the past.

Portrait Corp. of America and eight affiliates filed for Chapter 11 protection on Aug. 31, 2006, listing assets of $153 million and debts of $372.1 million.

The Matthews, N.C., company, which relies on film processing, blamed its bankruptcy filing on increasing demand for digital photography.