Cost cuts continued at Liz Claiborne Inc. Tuesday, and Wall Street awarded the moves with a 8.4 percent rise in its stock price.
The company, which has already reduced spending by at least $265 million since 2007, is eliminating about 725 positions, or 8 percent of its U.S. workforce, suspending merit pay increases for all employees and closing its distribution center in Mount Pocono, Pa.
The company declined to specify how much was being saved by the newest round of cuts, saying it would provide details on the savings and associated charges on Claiborne’s earnings call early next month.
Shares closed at $2.20, up 17 cents, but still 86.7 percent below their $16.53 price on Sept. 2, just before weak demand and the credit crisis combined to send stocks plummeting.
“The challenging retail and economic environment requires us to remain more focused than ever on cost rationalization and act decisively to manage the relationship between our revenue and our SG&A [sales, general and administrative expenses],” said chief executive officer William L. McComb. “As we strive to enhance our liquidity and prudently manage our business through this uncertain time, business leaders across our organization are continually reviewing all costs and determining where they can make an impact. Personnel decisions are always the hardest, especially in times like these. And while reducing head count is not the only cost-cutting measure being implemented, it is certainly the most difficult.”
Of the job cuts, 350 are from the distribution center, which will be closed in March to “better align our distribution capabilities with the current and future realities of the economy and our business.”
The company declined to break down where the other approximately 375 cuts are coming from, but said “the job eliminations span all levels of the company.” All affected employees are scheduled to be notified by the end of the first quarter, and eligible associates will be offered severance packages and outplacement services, according to the company.
Including this round of cuts, in the last two years the $4 billion vendor has closed six distribution centers, cut about 2,200 global staff positions, and streamlined its portfolio through selling, closing or licensing 14 brands.