In the world of luxury, layoffs are becoming standard procedure.
This story first appeared in the March 24, 2009 issue of WWD. Subscribe Today.
On Monday, Barneys New York disclosed it was eliminating 76 positions, including 30 that were vacant. The cuts follow those at competitors Neiman Marcus Inc. and Saks Fifth Avenue.
At Barneys, the affected jobs ranged from sales personnel to corporate posts. “They were across the board,” said Dawn Brown, vice president of publicity for Barneys.
The retailer has about 2,400 employees. The cuts were effective Monday.
“Initially, we elected to cut other expenses to save jobs as long as possible and now the continued economic downturn has made layoffs necessary,” Brown explained. The budget cuts have been made in every division and were started last year and continued into this year, she noted.
In mid-February, Neiman’s laid off 450 employees, from the vice president level on down, and reduced salaries for some personnel. In January, Neiman’s eliminated 375 jobs, many of which were on the cosmetics sales floor. Neiman’s head count is down 15 percent from a year ago and 20 percent from two years ago.
Saks, also confronting sharp sales declines and affluent consumers losing wealth, recently said it would eliminate 1,100 corporate and store positions, or 9 percent of the workforce. In addition, Saks eliminated 2009 merit-based wage increases for all employees, suspended 401(k) matching contributions for a minimum of one year, and future benefit accruals for associates remaining in the company’s pension plan. Inventories and capital expenditures are being curtailed as well.
Less expensive and more mass-oriented retailers — ranging from AnnTaylor Stores Corp. and J. Crew to Nike Inc. and Macy’s Inc. — have also been consolidating staffs.
However, Wal-Mart Stores Inc. appears to be bucking the trend by earlier this month awarding $2 billion to about one million hourly employees in bonuses, profit sharing, retirement contributions and financial incentives. The world’s largest retailer believes it is gaining market share in the recession.
Barneys is also grappling with other issues, including negotiating with a handful of factors over millions in delayed payments, though a resolution is expected soon, according to Barneys parent company, the Dubai-based Istithmar. Barneys has been operating without a chief executive since July. As the search continues, Barneys is operated by a committee of executive vice presidents and senior vice presidents, with some support from the board, which includes former ceo Howard Socol. Istithmar, an equity firm involved in buying and selling companies, will eventually try to sell Barneys to recoup its investment, but no sale is imminent. Istithmar bought Barneys for over $900 million from Jones Apparel Group Inc. in September 2007, and no sufficient offer has surfaced.