COLDWATER CUTS STAFF BY 8%
Byline: Jennifer Weitzman
NEW YORK — The pessimism haunting retailers so far this year hit the Rocky Mountains last week as Coldwater Creek, nervous about consumer spending, said it would eliminate 160 positions as it reduced staff by 8 percent.
The effort to reduce costs, including the staff reductions, is a direct response to the Sandpoint, Idaho-based specialty retailer’s warning Feb. 13 that it now expects its fiscal fourth-quarter earnings to fall between 4 to 7 cents. Wall Street was figuring the company’s earnings at 66 cents.
“Following our robust sales performance over the past 12 months, we entered the important January-February spring selling season with the anticipation of continued strong sales activity, and staffed our call centers and distribution centers accordingly,” Georgia Shonk-Simmons, chief executive, said in a statement. “Quite simply, those early spring sales did not happen this year, and we are adjusting our staff size to a more efficient base to reflect the change in full-price sales.”
The staff reductions will affect 160 employees at Coldwater Creek facilities in Idaho and West Virginia and will be concentrated in its call and distribution centers.
Shonk-Simmons said the company’s brand-building strategy for opening retail stores across the country would not be affected. She said Coldwater remains on schedule to roll out its 10 to 15 new stores during fiscal 2001.
A company spokesman said the firm now operates 10 retail stores, including eight urban store concepts and the two original resort community stores it opened in 1997.
He said the company’s retail stores have performed well while the catalog, particularly its cornerstone Northcountry book, has been experiencing sales shortfalls.
“This is our opportunity to take the model we built as a direct retailer and take it on the road,” he said.
In addition, the firm said new hires, non-essential travel and internal expenditures are on hold.
“Our job is to maintain our excellent financial position as we navigate this temporary slowdown,” the ceo said. “We believe the cost controls we’ve put in place will be sufficient to that end, and no other actions are planned at this time.”
While specialty retailers have so far escaped large-scale staff reductions, such as those that have recently hit the U.S. automobile industry, a number of broadline retailers — including Sears, Roebuck & Co. and J.C. Penney — have included layoffs and terminations as part of recent store consolidation and corporate restructuring plans. Closures at the bankrupt Montgomery Ward and Bradlees retail chains have also eliminated thousands of positions, although new occupants of their store sites ultimately might provide positions for some of the idled workers.
The Feb. 13 warning reduced Coldwater’s stock price more than 40 percent, sending it to a 52-week low of $15.31 before closing at $20 in Nasdaq trading. Its high in the past year is $40.38, reached on Sept. 14.
Coldwater’s shares closed down 19 cents on Friday, $1.19 for the week, to $17.81.