Retailers Slash Headcounts
James Mammarella -- Home Textiles Today, February 9, 2009
Like Macy’s Inc., other retailers facing the economic crisis and an uncertain 2009 have made a range of cost-cutting and streamlining moves in recent days — especially in the area of payroll reduction.
In the last two weeks, merchants said they have already or will soon:
Cut 1,500 associates and close a distribution center — Target;
Cut 300 HQ positions — Sears Holdings;
Cut 1,150 jobs and reduce capital expenditure — Bon-Ton;
Cut 18% of HQ and support staff, exit 8 markets — Cost Plus;
Cut 10% of non-store staff, review 125 leases — Pier 1;
Cut 9% of non-store staff, cut cap ex by 45% — Hancock Fabrics;
Cut 1,000 jobs in the U.S. and Canada — Hudson’s Bay Co.
Even before this latest round of cuts, there were these early-January moves:
Cut 1,400 jobs, close call center and DC — Williams-Sonoma;
Cut 7,000 jobs and shut down the EXPO chain — Home Depot;
Cut 209 jobs and cut management pay 5% — Stein Mart;
Close 11 of its 36 stores — Filene’s Basement;
Add these actions to the 7,000 jobs cut by Macy’s and the tally is more than 20,000 retail jobs gone in the first five weeks of the year.
Not included in that total: the Chapter 11 filing by Fortunoff on Thursday, Feb. 5 — adding more hurt to a home textiles industry that had hoped to see Fortunoff home departments appear in Lord & Taylor department stores, which are owned by the same firm, NRDC Equity.
These fast-breaking developments follow a 2008 that saw the complete disappearance of three chains vital to home textiles suppliers: Linens ’n Things, Mervyns and Value City. Combined full time retail headcount there: at least 8,000.
Back to the living: Beyond the salary-gutting, some of these retailers have also taken such steps as eliminating bonus pay, freezing company contributions to 401(k) plans, and taking other benefit programs off the table; as well as amending credit facilities, attacking their logistics structures, and reducing store opening plans in favor of store remodels.
Most, if not all, are in urgent negotiations with landlords. Pier 1 went so far as to hire a firm to take over that function, and said the amount of rent reduction it is offered on various leases by May will determine the fate of up to 125 stores.
On another front, Cost Plus amended its preferred shares rights plan to enable investor Warren A. Stephens and Stephens Investments Holdings to acquire up to 19.9% of the company’s common stock. This is a symptom that spotlights the question: Which of the major publicly held retailers are likely to get taken over by private interests? In some cases, that point could be moot due to the associated question: Which of these companies will slide into bankruptcy this year?
Either course will unleash further disruption on the supplier side of the already beleaguered home textiles industry.
With many of the announced cuts and closures coming in the fiscal fourth quarter of 2008 or in the first quarter of the new year, there is some reason to consider all this as a necessary dose of very strong medicine. If, as a group, retailers of home furnishings can bring about a sense of fiduciary calm as the first half of the year progresses, there may be hope that they can take full advantage of any consumer rally stemming from a federal stimulus impact in the second half of 2009.
On the other hand, the year has just started — and the industry has yet to hear publicly about any potential workforce reductions or possible store closing plans by several other very large customers.
While there is no reason to expect any particular such move by any of these additional retailers, it is worth noting that full-year 2008 sales, as reported last week, for Dillard’s fell 7.0%, and for JCPenney fell 8.5%.
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