REEBOK TO LAY OFF 10% OF STAFF

Byline: Rosemary Feitelberg

NEW YORK — To control costs and streamline the company, Reebok International announced Thursday that it planned to lay off 10 percent of its 6,600 employees worldwide.
The company plans to eliminate 120 jobs at its corporate headquarters in Stoughton, Mass., 10 percent of the workforce at that location, a Reebok spokesman said.
Reebok plans to announce the other cuts in the next few weeks, according to a company spokesman.
Carl Yankowski, president and chief executive officer of the Reebok Brand, is one of the key executives scrutinizing the plan, the spokesman said.
“The reduction in people is an important part of the cuts, but it is by no means the majority. We’re looking at marketing, logistics, computer operations, warehousing and a myriad of other things,” he said. “Obviously, people are more fixated on the people part of the equation because it’s more tangible.”
To consolidate footwear manufacturing, Reebok plans to shift production from one of the factories it uses in Indonesia and eliminate production in the Philippines.
The Reebok spokesman declined to reveal the extent of the budget cuts.
When the company released its second-quarter earnings in July, Reebok acknowledged declining sales and the need to reduce sales, general expenses and administration spending to more acceptable levels, according to a statement released by the company Thursday.
Reebok’s second-quarter earnings fell 25.7 percent due in part to a sharp decline in U.S. apparel and footwear sales. Profits in the period ended June 30 were $4.6 million, or 8 cents a share, against $6.1 million, or 11 cents. Sales declined 8.3 percent to $697.4 million.
This will be the company’s second round of layoffs in 19 months. Last year Reebok handed out pink slips to 500 employees, or 10 percent of its branded division.
Susan Silverstein, principle at Banc of America Securities, described the layoffs announced this week as “a necessary evil.”
“The market-share game is becoming more difficult. Now the smaller players like KSwiss, New Balance and Saucony are nipping at their feet,” she said.
“Reebok was a little too deep into moderate and mass accounts, which is something they have been attempting to clean up. Initially, that has hurt sales,” Silverstein said.
“At the same time, they’ve brought someone in from France [Anne Pirot, the firm’s new senior vice president of global apparel] to update their fashion, but that takes time. They have some image, marketing and product issues.”
Reebok will continue to trim its apparel offerings by reducing stockkeeping units and designing the line for a global audience instead of a specific country, the Reebok spokesman said. Women’s, Reebok Classics and kids’ are three key components with energy to drive the brand, he added.
Reebok will unveil its first advertising campaign for Reebok Classics in January. Bartle, Bogle & Hegarty is developing the print ads.
“We’re going to continue to offer products across the board in all categories. We don’t want to walk away from areas where we are doing business,” he said.

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