REI said it plans to eliminate 61 full-time jobs, mostly at its Kent, WA headquarters and Sumner, WA distribution center, due to a “significant business slowdown in the final months of 2008 and continued projected weakness in 2009.”
REI reported sales rose 6.9% to $1.4 billion in 2008. The co-op's direct sales channel, which includes online and catalog sales, grew by 14.2% while comp store sales increased by 0.3% in 2008.
The co-op's operating income for 2008 decreased 31.0% to $73.6 million from $106.5 million in the prior year due to the “challenging economic climate.” Net income tumbled 65.0% to $14.5 million for 2008, compared to $41.4 million in 2007.
“REI posted positive results for the year because of [a] strong performance prior to the fourth quarter,” said Sally Jewell, REI's president and CEO. “November and December were very challenging months and our business plan for 2009 is generally flat to last year. While we are financially strong and free of the debt that has challenged so many businesses, we must plan accordingly to this drop in customer demand. This unfortunately means that we must reduce expenses and staffing to align with projected lower sales and workload demands.”
REI said the elimination of the full-time jobs represents less than 2.0% of its full-time workforce. The positions are primarily located in its Kent, WA-based headquarters, and the Sumner, WA distribution center. In addition, a number of part-time, hourly positions were eliminated on a store-by-store basis in about half of the company's 105 retail stores and in the Sumner distribution center.
REI also is deferring pay raises for headquarters and management staff, letting job openings go unfilled except for those considered “critical,” and delaying or eliminating some projects and programs. Laid-off employees are expected to get severance pay, help finding other jobs, and two years of access to the retailer's employee assistance program.
In an e-mail to employees, Jewell said, “We are projecting essentially no growth in 2009, yet our expenses as a company continue to grow.” She indicated that the company's Board of Directors “has faith in the long-term strength of REI” and had agreed to allow the company to operate in 2009 with a reduced level of profitability “during this tough economy.”
REI said that based on the co-ops 2008 sales, $72.7 million in patronage refunds
will be distributed to 3.7 million active co-op members.