Upscale U.S. retailer Saks Incorporated has announced the planned reduction of approximately 1,100 corporate support and store positions, equating to approximately nine percent of its total workforce. This step is part of the company's larger cost and capital expenditure reductions being implemented as a response to the current economic downturn. Most of the position eliminations will go into effect by January 30, 2009.
"Our financial performance is increasingly being challenged by some of the most difficult economic conditions our company has faced in its 84-year history," says Steve Sadove, Chairman and Chief Executive Officer of Saks Incorporated. "The sustained downturn in the economy and the decline in luxury consumer demand necessitates that we take appropriate and decisive measures to position the company for this new operating environment. The cost and capital expenditure reductions are structured to minimize the impact on our customers, and the reduction in inventory receipts is reflective of the decrease in consumer demand," adds Sadove.
Saks 2009 cost reductions and eliminations are expected to total between US$50 million and US$60 million and will be reflected in cost of sales and in selling, general and administrative expenses. The company has also lowered its planned capital expenditures for fiscal 2009 to approximately US$60 million, a decrease of more than 50 percent from the projected 2008 level.
In addition to staff cuts, the company is also eliminating its 2009 merit-based wage increases for the entire workforce, suspending its 401(k) plan company matching contributions for a minimum of one year, and suspending future benefit accruals for the limited number of associates remaining in the company's pension plan.