NEW YORK — In a move that will eliminate almost 300 jobs, Saks Inc. is consolidating back-office operations of its Des Moines, Iowa-based Younkers unit into the headquarters of its Carson Pirie Scott division in Milwaukee.
Birmingham, Ala.-based Saks said the reorganization is slated for completion in the fourth fiscal quarter ending Feb. 1, 2003. Saks expects to save approximately $12 million pre-tax annually beginning in 2003, and will take approximately $10 million in after-tax charges for property write-offs and cash charges for severance pay in the fourth quarter.
The consolidation will result in the elimination of about 270 positions at the Younkers home office in Des Moines and approximately 25 jobs in Younkers’ furniture warehouse and Younkers’ distribution center, both in Green Bay, Wisc.
“The planned Younkers consolidation is a result of a thorough review of our organizational structure,” said George Jones, chief executive officer of the Saks Department Store Group, in a statement. “While this is a good business decision, it was certainly a difficult one to make. We know this is a challenging time for the associates who are being affected. We are committed to offering these associates other opportunities within the organization, where appropriate, and to ensuring that all associates are treated fairly and provided assistance during this time of transition.”
The consolidation reverses Saks long-standing policy in which it maintained separate organizational structures for its various department store holdings.
In a research note to investors, J.P. Morgan analyst Shari Schwartzman Eberts wrote: “We see this as a necessary step in bringing [Saks’] cost structure in line with the new, difficult sales reality and are making no change to our 2003 estimate of 87 cents [per share], as we see this is a step in helping them get there.”
Merchandising, advertising, marketing and various support functions of the 50-unit Younkers division will be absorbed into the 96-unit Carson Pirie Scott division. That division currently operates under the Carson Pirie Scott, Boston Store, Bergner’s and Herberger’s nameplates. The majority of Younkers stores will continue to operate under the Younkers name, but store names may be changed in markets where nameplates overlap.
Eberts continued that “the consolidation will leave four operating divisions — one covering the North, one covering the South, Saks’ Parisian division, which will remain separate, and [Saks] Fifth Avenue. The company does not believe additional consolidations are possible, given the different operating models of Parisian and Saks Fifth Avenue and the regional focus of its other two divisions.”