Saks, Barnes & Noble, New York & Co. Announce Cutbacks

Three New York-based retailers – Saks Inc., Barnes & Noble Inc. and New York & Co. – have announced cutbacks and layoffs.

Saks, following the lead of its rival-in-luxury Neiman Marcus, said it was cutting 1100 in-store and corporate support jobs, or about 9 percent of its work force, eliminating merit-based wage increases and suspending matching contributions to employee 401(k) plans for at least a year. On Wednesday, Neiman Marcus had said it was cutting 375 jobs, or 2.3 percent of its work force.

Sales of luxury goods fell 27.6 percent in December 2008 after dropping 24.4 percent in November. Saks’ own sales fell by double digits and the retailer has acknowledged that its profit margins were taking a beating after it offered deep discounts to attract consumers.

“Our financial performance is increasingly being challenged by some of the most difficult economic conditions our company has faced in its 84-year history,” said ceo Stephen Sadove.

Barnes & Noble, the world’s largest chain of bookstores, has laid off 100 people in its New York headquarters, citing a recent downturn in sales. The company had announced last week that holiday store sales in the nine-week period through Jan. 3, 2009, were down 5.2 percent. Online sales were down 11 percent during the same period.

This is the first time in the company’s history that it has cut jobs, according to ceo Stephen Riggio. A spokeswoman said there were no current plans to close any of the 799 stores.

And specialty retail chain New York & Co. announced plans to close 10 to 15 stores in 2009 and cut more than 300 management and corporate positions as part of a multi-year cost-cutting program. The 2009 closings are the first step in a long-range plan to close up to 50 stores over five years. The retailer said it expects to generate roughly $175 million in pre-tax savings as a result of the cutbacks. New York & Co. operates 600 stores in 44 states.
In December 2008, New York & Co. reported a same-store sales decline of more than 10 percent.

“These are unprecedented times in the retail industry and across many other industries and geographic regions,” said ceo Richard Crystal. “These times require financial discipline, and our company’s leadership team has given a great deal of thought as to how we can reduce existing expenses, enhance efficiencies and focus on our strategic plans for the future.”

New York & Co. did not identify the store locations that will close, other than to say they are underperforming locations. They will be shuttered when their leases expire, or when exit provisions can be used, to reduce costs.
 

The job cuts will affect 260 managers and 50 corporate office jobs, representing a 12 percent cut of the company’s management and a 10 reduction of corporate workers. The retailer has also implemented a broad cost-cutting program that would involve discretionary spending, purchasing and other operational expenses.