One day after revealing that chairman and ceo Alan Lacy had tripled his incentive award in 2002, Sears, Roebuck & Co. (Hoffman Estates, Ill.) announced plans to cut hundreds of jobs, most of them at its headquarters, in an effort to shore up profits as sales continue to tumble.
According to Crain's Chicago Business, Lacy told employees in a memo posted on Sears' internal web site last week that the company has a “significant gap” in its 2003 operating plan and has yet to meet outlined productivity targets.
Sears' goal is to increase its per-share earnings 50 percent over the three years ending in 2004, according to the company's 2002 annual report. But the retailing giant's same-store sales have fallen every month since September 2001. And the credit card business, which has been Sears' profit engine, is expected to show a single-digit profit decline this year, according to the company, as a growing number of Sears' credit card customers fail to pay their bills.
A Sears spokeswoman confirmed the job cuts. “As part of an ongoing program of continuous productivity improvement, we do have some strategic head count reduction focusing on headquarters employees at Hoffman Estates,” she told Crain's. Staffing decisions will be made in mid-April, and the pink slips will begin arriving in May. The workforce reductions will be concentrated on salaried and hourly workers at headquarters and in some field locations, according to the memo.
“If we are to compete effectively long term, we must continuously reduce our cost structure,” Lacy said in the memo. “Each business and function is reviewing its plan to reduce costs as much as possible.”
Lacy's bonus was boosted to $1.8 million from $670,000 in 2001, according to a proxy filing with the Securities and Exchange Commission. He also got a $100,000 raise, bringing his 2002 salary to $1 million.