Williams-Sonoma in full cost-cutting mode
-- Home Textiles Today, 1/22/2009 2:50:00 PM
San Francisco – Home furnishings specialty retailer Williams-Sonoma Inc. is taking dramatic actions – including an 18% cut in headcount – to reduce its overhead by about $75 million in 2009.
By Jan. 31, the company said it will:
cut about 1,400 full-time positions;
close the 38,000-square-foot Camp Hill, Pa. call center;
close the 500,000-square-foot distribution facility in Memphis, Tenn.
Williams-Sonoma said these measures will save about $60 million; another $15 million is expected from further cost reductions related to catalog production, supply chain operations and information technology.
Williams-Sonoma said it expects to incur a pre-tax charge in the 2008 fourth quarter related to these actions of up to $15 million, or 8 cents to 09 cents per diluted share on an after-tax basis. This charge, of which about $4 million is expected to be paid in the fourth quarter and the balance in fiscal 2009, primarily relates to severance and lease-related costs.
The multi-platform merchant still expects to deliver Q4 earnings at the lower end of its previous guidance of 10 cents to 30 cents per diluted share.
Howard Lester, chairman and ceo, added that Williams-Sonoma is aiming for a reduction in 2009 year-end merchandise inventories in the range of 10% to 12% vs. the earlier goal of 7% to 10%; catalog circulation reductions of 15% to 20%, as previously expected; retail leased square footage growth (net of closures) of 2% vs. previous guidance of 3%; and capital spending to hit $90 million to $100 million vs. the previously expected $95 million to $105 million.
“All of these initiatives will allow us to maintain our financial flexibility, while at the same time focus on those strategic objectives that will enhance our competitive positioning when these macro headwinds subside,” Lester said.
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