Saks eliminates 1,100 jobs, cuts other costs
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NEW YORK: Luxury retailer Saks Inc. said Thursday that is eliminating 1,100 jobs and taking other steps to cut costs by about $50 million to $60 million in 2009 as the retail environment continues to deteriorate.
Saks said the eliminated jobs are in both corporate support and store positions and amount to about 9 percent of the company's total work force. The latest job cuts follow the retailer's announcement in November that it was discontinuing its Club Libby Lu business, which employed about 1,700 associates.
Saks expects to book cash severance charges of about $9 million for the latest round of cuts, which will mostly impact the fourth quarter ended Jan. 31. Saks said most of the job cuts will take place by Jan. 30.
Saks is also eliminating merit-based wage increases in 2009, suspending matching contributions to the company's 401(k) plan for at least one year and suspending benefit accruals for associates who remain in the company's pension plan.
"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 Chairman and Chief Executive Steve Sadove in a statement. "It is our expectation that the economic environment will remain extremely challenging through 2009, if not beyond."
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Sadove said the expense reductions are structured to minimize the impact on customers.
The company said it is also cutting some costs in the areas of procurement, information technology, distribution and logistics, travel, and marketing.
Saks has also reduced its planned capital expenditures for fiscal 2009 to roughly $60 million, a decrease of more 50 percent from the projected 2008 level. The company also plans to reduce inventory receipts by about 20 percent for 2009.
Sadove noted that the company continues to have flexibility under its existing credit facilities, with no short-term maturities of senior debt.
Saks is slated to report its complete fourth-quarter and full-year results on Jan. 31.
Saks' shares shed 8 cents, or 2.5 percent, to $3.36 in aftermarket trading, having closed the regular session at $3.45. The stock has lost 82 percent of its value since touching its 52-week high of $19 in February.
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