REI announced plans to eliminate 61 full-time jobs, mostly at its Kent headquarters and Sumner distribution center, due to a “significant business slowdown in the final months of 2008 and continued projected weakness in 2009.” Net income tumbled 65% to $14.5 million from $41.4 million in 2007
The co-op's operating income for 2008 decreased 31% to $73.6 million from $106.5 million in the prior year due to the “challenging economic climate.” REI reported sales rose 6.9% to $1.4 billion in 2008.
The company said the elimination of 61 full-time jobs represents less than 2% of its full-time workforce. The positions are primarily located in its Kent-based headquarters, and the Sumner,
“REI posted positive results for the year because of 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.”
Jewell noted the expense management plans include deferring raises for headquarters and management staff, hiring only critical staff positions, and the delay or elimination of some projects and programs.
Full-time employees departing from REI will be given transition support – including severance pay, outplacement assistance, and access for two years to REI's Employee Assistance Program.
“I'm pleased that despite our reduced net income, REI's 2008 performance allows us to pay our members a 10 percent patronage refund,” Jewell said. “The co-op is committed to operating carefully and for the long-term so that we can continue to meet our members' expectations, support their interest in enjoying nature and the outdoors, and grow the next generation of outdoor participants.”
For 2009 REI is planning to make key strategic investments to position the company for success when the economy recovers. These investments include plans to open five new retail stores this year and an upgrade to the company's key merchandising systems.