Amidst ongoing efforts by REI store employees to unionize during a tough retail economy and reported heavy over-inventory levels at the outdoor gear co-op, the word now comes down from the corner office that the retailer laid off 167 leaders and employees at its headquarters locations.

In a letter to employees on Tuesday, REI President and CEO Eric Artz said that the co-op would shed approximately 8 percent of its headquarters workforce, representing less than 1 percent of its total headcount. Artz indicated that the impacted employees had been notified via a conversation with a leader.

“Earlier this month, I shared an update on the state of our business and the broader economic conditions we foresee in the year ahead,” Artz wrote in his letter. “We have clear goals for the future of the co-op and are confident in our long-term strategies. But in the face of increasing uncertainty, we need to sharpen our focus on the most critical investments and areas of work to best serve our members and grow the co-op over the long term. We will need to make hard choices, and that will be the work ahead for all of us.”

Artz said in the letter that it is vital that the co-op get back to profitability as quickly as possible.

“I know we can get there, but it will require each of us to work very differently,” he shared. “In the year ahead, we will align around a few vital strategic priorities to ensure we are making the best use of the co-op’s resources to serve members, customers and support our long-term impact goals. This also means centering our work around the customer and member experience.”

The employees affected by the announced job cuts will receive severance packages, four months of health care through COBRA continuation of health care coverage, pay for unused vacation time, 2022 bonuses, and outplacement support for finding a new job.

In addition to the cuts, the changes also mean “strategically reorganizing and combining several headquarters divisions so that teams are organized around a focused set of priorities.”

Over the past year and a half, REI expanded its leadership team, including new C-suite positions. 

In 2021, according to REI’s annual report, the co-op invested $128.9 million in employee profit-sharing, retirement and performance incentives.

The company’s most recently available annual report from 2021 reported $3.7 billion in revenue, up 36 percent from the prior year and a net income of $97.7 million. 

But 2022 was a tumultuous time for the retailer as supply chain woes reportedly hit the company hard, leaving the co-op with heavy inventories stored in containers after merchants over-bought, hoping to get what they needed. Many speculated that when the supply chain freed up, REI had far too much product in the pipeline. 

Recent conversations with REI vendors uncovered issues with too much of the wrong product sitting in containers while brands selling through saw orders cut back. More than one vendor at a recent trade show told SGB Executive that REI had over 1,000 containers backed up going into the holidays.

Forbes published a web page with current deals at REI, which includes discounts of 10 percent to 25 percent off during February and up to 50 percent off on key brands, including Patagonia, The North Face and Arc’teryx, and footwear deals with up to $90 off on specific boot styles. The heavy discounting will undoubtedly cut into margins when the retailer should be focused on turning the sales floor to bring in spring product.

Photo courtesy REI