Tandy Brands Accessories Inc. said Tuesday it will cut 17 percent of its salaried workforce as part of a company restructuring plan.
The reorganization is designed to reduce operating expenses, increase flexibility and focus on product development, the company said.
“We are in an extremely challenging retail environment and it is imperative to have an agile corporate structure that can respond to meet today’s market realities,” said Rod McGeachy, who joined the Arlington, Texas-based company as president and chief executive officer in October.
Tandy said it would eliminate the president positions at both its men’s and women’s divisions, discontinue underperforming brands and streamline the sales structure, among other changes.
The company estimates the moves could potentially result in $3 million of annualized savings and pretax charges of $550,000 to $650,000, the majority of which would be taken in the third quarter ending March 31.
The company didn’t disclose the number of employees affected, but as of June 30 it employed 568 full-time workers, which would put the job loss just below 100 positions.
McGeachy said upon his appointment as ceo that he would assemble a strategic plan for the firm within his first 100 days at the helm, “but we have to stabilize the core business first,” he told WWD, adding “it starts with stabilizing the core and then expanding into new channels, retailers, new brands and eventually new categories.”
In the year ended June 30, the company lost $49.3 million, or $7.18 a diluted share, including an $18.7 million inventory write-down and a $17.8 million impairment charge. Sales fell 23.8 percent to $149.3 million and gross margins fell to 21.9 percent of sales from 35.7 percent in 2007.
In the first quarter of the current year, ended Sept. 30, Tandy lost $1.3 million, or 18 cents a diluted share, versus a loss of $1.7 million, or 25 cents, in the year-earlier period. Sales dropped 12.3 percent to $34.6 million from $39.5 million. Last month, the company elected to suspend its quarterly dividend for the second quarter, the results of which haven’t yet been disclosed.