Outerwear Brands Facing Cutbacks and Layoffs

Eddie Bauer and Wolverine Ltd eliminate jobs, and L.L. Bean freezes its employees' salaries.

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Like many other apparel companies, outerwear manufacturers are facing a slew of layoffs.

This story first appeared in the February 3, 2009 issue of WWD.  Subscribe Today.

With the economy showing no signs of rebounding anytime soon and consumers keeping a tight lid on any nonessential expenses, brands are trying to do their own cost cutting. For some, salary and hiring freezes and retirement incentives are stopgaps to prevent any imminent job decreases, but for other firms, they’ve had to cut jobs.

Of course, the bleak financial forecast could lead to more rounds of pink slips. Just last week, the International Labor Organization reported that as many as 51 million jobs may be eliminated this year, and that would drive up the global unemployment rate to 7.1 percent by year’s end. Last year’s unemployment figure was 6 percent and 2007’s tally was 5.7 percent.

Last week Eddie Bauer said it was slicing 15 percent of its corporate 1,300-person workforce: 193 nonretail jobs in its Seattle headquarters; an information technology center in Chicago; a distribution center in Columbus, Ohio, and a call center in Saint John, New Brunswick, Canada.

Neil Fiske, president and chief executive officer, agreed to take a 10 percent pay cut in his $1.1 million annual salary, according to Tom Helton, senior vice president of human resources. Earlier this month, Fiske called the retail climate “the worst in decades” and issued 2009 cost reductions of $10 million to $15 million. Eddie Bauer has implemented a salary freeze, will limit capital spending to $15 million, is adjusting select benefits programs, is reducing the size of its board from 10 members to seven and is reducing compensation for the remaining ones by 50 percent. In addition, the value of annual equity grants for board service will be reduced, and the 2009 annual equity award for board service will be deferred.

In his remarks earlier this month, Fiske said the company’s turnaround program continues to show results.

Eddie Bauer is not doing any mass store closings, and this year’s aim is to maintain the current store count of 379 outlet and full-priced stores, Helton said. With its retail operations, Eddie Bauer employs between 8,000 and 10,000 people depending on the time of year.

Last year Eddie Bauer’s annual sales tallied $971.3 million, Helton said.

As part of the second phase of its top-to-bottom strategic review of branded businesses, Wolverine World Wide, a 125-year-old Rockford, Mich.-based apparel and footwear company, is consolidating key distribution and global operations functions. Once fully implemented, the company expects to eliminate 450 jobs — or 10 percent of its workforce in the U.S., Europe, Canada, Asia and the Dominican Republic. Wolverine projects to have about 4,200 employees worldwide once all is said and done.

This restructuring should generate an annualized pretax benefit of between $17 million and $19 million. Wolverine is consolidating its North American distribution operations into existing Michigan warehouses and the company’s European distribution operations into one facility.

Wolverine also is looking into outsourcing its leather processing and closing the Rockford-based tanning facility. The full-time and part-time employee base is being reduced to improve efficiency, according to a statement issued by the company Friday.

L.L. Bean is working to avoid layoffs and a mandatory reduced work week, but salary and hiring freezes have been put in place for employees this year. Those initiatives should help the company avoid the reduction of 75 to 100 positions, according to a company spokeswoman. L.L. Bean has about 5,400 year-round employees.

Later this month, the Freeport, Maine-based manufacturer, retailer and mail-order business will start offering early retirement incentives to all employees who are 55 or older and have been with L.L. Bean for five or more years. The program will be available through early April, and the results of that effort will determine whether layoffs will be necessary, the spokeswoman said. At this stage, L.L. Bean executives do not have a sense of how many eligible employees will be interested in the retirement incentive, the spokeswoman said.

Having already had a round of layoffs last fall, Columbia Sportswear does not anticipate any more at this stage, a company spokesman said. Last year’s reduction was related to a shift in the company’s business model “where we allocated efforts to the areas that support our go-to market [growth] strategies, i.e. new ways to streamline logistics — in some cases, outsourcing etcetera,” he said.

Carhartt, a West Dearborn, Mich.-based manufacturer and retailer, also has managed to sidestep layoffs thus far. A company spokeswoman said Friday, “We’ve been fortunate in that way. We are a growing company in a down economy, but you never know where it can take us.”

She declined to comment about any potential layoffs. Carhartt, a favorite workwear label with construction workers and others who earn their livings outdoors, also manufactures and distributes a considerably hipper line of sportswear in Europe. The privately owned company has about 6,000 stores worldwide.


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