Outdoor gear and apparel retailer Recreational Equipment Inc. reported web sales were $237.8 million for fiscal 2008, up by about 5.3% from $226 million in fiscal 2007. The slim increase wasn’t enough to stave off the recent elimination of 61 full-time jobs. Total sales for fiscal 2008 were $1.43 billion, up by about 6.7% compared with $1.34 billion in the prior fiscal year.
By comparison, in 2007 web sales for REI.com rose by 15.9% to $226 million from $195 million in 2006. Comparable store sales grew by 8.2% in 2007.
Based on a significant business slowdown in the final months of 2008 and continued projected weakness in 2009, REI is eliminating less than 2% of its full-time workforce, the company says. The positions are mainly in REI’s Kent, Wash.-based headquarters, and the Sumner, Wash., distribution center. In addition, a number of part-time, hourly positions were eliminated on a store-by-store basis in about half of the company’s 105 retail stores and in the Sumner distribution center. The job eliminations were part of a companywide effort to meet 2009’s difficult business climate, REI says.
Net income of $14.5 million for fiscal 2008, ended Dec. 31, was down 65% from $41.4 million in 2007. The company’s direct sales channel, which includes online and catalog sales, grew by 14.2% while comp store sales increased by 0.3% in fiscal 2008.
“REI posted positive results for the year because of strong performance prior to the fourth quarter,” says Sally Jewell, president and CEO. “November and December were very challenging months and our business plan for 2009 is generally flat to last year. 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.”
The expense management plans include deferring raises for headquarters and management staff, hiring only critical staff positions, and the delay or elimination of some unnamed projects and programs, Jewell says. Full-time employees departing from REI will be given transition support--including severance pay, outplacement assistance and access for two years to the company’s employee assistance program.
REI says it still plans to make strategic investments in 2009 to position the company for success when the economy recovers. They include opening five new retail stores this year and upgrading the company’s main merchandising systems.
REI did not break out results for Q4 2008. As a co-op, REI shares profits with its members with the goal of returning 10% through an annual patronage refund. Based on the co-op’s 2008 sales, $72.7 million in patronage refunds will be distributed to 3.7 million active co-op members.
REI is No. 62 in the Internet Retailer Top 500 Guide.
Brian Galloway, direct response programs manager at REI, is speaking at the Internet Retailer Conference & Exhibition, June 15-18 in Boston, in a session titled Creating the right search campaigns: How your product mix affects how much you spend on search.
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