November 13, 2008, 12:00 AM

QVC gives 700 employees their walking papers

QVC Inc. is jettisoning 700 jobs, or about 5.8% of its U.S. workforce, to trim operating costs. The TV and web retailer will save up to $40 million annually by laying off employees at its West Chester, PA, distribution center and elsewhere.

Katie Evans

Managing Editor, International Research

QVC Inc. is jettisoning 700 jobs, or about 5.8% of its U.S. workforce, to reduce operating costs.

The TV and web retailer, No. 11 in the Internet Retailer Top 500 Guide, will save between $30 million and $40 million in 2009 by laying off employees at its West Chester, PA, distribution and call center and elsewhere. The company is laying off 160 employees immediately, while other job cuts will be staggered over 14 months. Approximately 250 workers will be issued pink slips when QVC closes down its West Chester call center by next March. “To ensure we’re operating as efficiently as possible, we made difficult decisions to lower our operating costs,” says QVC president and CEO Mike George.

With the exception of jewelry returns, QVC will phase out most functions of its West Chester distribution center and convert its Florence, SC, center into a hub for distributing its apparel, accessories and jewelry products. In the future QVC’s home product lines will be fulfilled at facilities in Rocky Mount, NC, and Suffolk, VA, and a distribution center in Lancaster, PA, will pick, pack and ship health and beauty product lines and be used as a centralized returns center for apparel, accessories, health and beauty merchandise.

The consolidation will eliminate a total of 900 positions, offset by the creation of approximately 200 new positions, for a net reduction of approximately 700 jobs, says QVC. “I had hoped we could avoid layoffs as we pursued our long-term growth strategies, but after witnessing the continuing deterioration in the economy, I came to the reluctant conclusion that this was not going to be possible,” says George.

The job cuts and other cost-cutting measures come at a time when QVC is generating lackluster sales. Total sales for QVC dropped in the third quarter, but domestic e-commerce revenue grew slightly. For the quarter ended Sept. 30, U.S. web sales for QVC rose year-over-year by 4.5% to $257.5 million from $246.5 million. Overall revenue, which includes both U.S. and overseas sales, decreased by 2.4% to $1.64 billion from $1.68 billion in the third quarter of 2007. QVC also posted third quarter operating income of $231 million vs. $175 million in the prior year. QVC doesn’t break out its foreign web sales.

Ivy Chin, vice president architecture, design & video, QVC, will speak at Internet Retailer Web Design Conference, Jan. 19-22, 2009, in Miami. Chin’s session will be on Jan. 20.

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