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REI Lays Off 61 Amid Slowdown

Published February 12, 2009

KENT, WA (BRAIN)—REI said this week that it would lay off 61 full-time employees due to a significant slowdown in business late last year and continued projected weakness in 2009.

The jobs, which represent less than 2 percent of the co-op’s workforce, will be cut from the Kent, Washington headquarters and the Sumner, Washington distribution center, according to a press release issued by the company on Wednesday.

Even though 2008 sales were up by 6.9 percent, REI’s net income was down 65 percent—from $41.4 million in 2007 to $14.5 million in 2008—and operating income decreased to $73.6 million last year from $106.5 million the year before.

REI does not disclose results for specific segments, but company spokeswoman Megan Behrbaum said cycling-related sales increased 16.4 percent from 2007 to 2008.

In addition to the full-time job cuts, a number of part-time, hourly positions were eliminated on a store-by-store basis from REI’s 105 retail stores and the Sumner distribution center.

“November and December were very challenging months and our business plan for 2009 is generally flat to last year,” said Sally Jewell, REI’s chief executive officer. “While we are financially strong and free of the debt that has challenged so many businesses, we must plan accordingly to this drop in customer demand. This unfortunately means that we must reduce expenses and staffing to align with projected lower sales and workload demands.”

Jewell said REI will also defer pay raises for headquarters and management staff, hire only critical staff positions, and delay or eliminate some projects and programs.

The co-op plans make several strategic investments in 2009 including opening five new retail stores and upgrading merchandising systems.

Full-time employees departing from REI will be given severance pay, outplacement assistance and access for two years to REI’s Employee Assistance Program.

—Nicole Formosa

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