PORTLAND, Maine — L.L. Bean Inc., the Maine-based clothing and outdoor-goods retailer, anticipates layoffs this year after annual revenue dropped for only the third time since 1960, the company’s CEO told employees in a memo Monday.
Revenue for the company’s fiscal year that ended late last month was $1.5 billion, down 7.8 percent from the previous year, and sales are expected to be down in 2009 as well, said Chris McCormick, president and CEO. Privately held Bean doesn’t release earnings.
L.L. Bean, headquartered in Freeport, already imposed a wage freeze and had warned employees late last year of restructuring and potential layoffs as shoppers cut back on purchases made through L.L. Bean’s Web site, catalogs and retail stores.
McCormick said he remains “cautiously optimistic” that voluntary retirement incentives will reduce the scope of layoffs in 2009.
“We expect a further reduction in sales in 2009, and we will be forced to resize and restructure the business to match the projected decline in sales and work volumes. The 2009 budget, the most difficult in my career, strikes the appropriate balance of cost cutting while continuing to invest in our future,” McCormick told employees on Monday.
No decision will made on the number of layoffs until after the deadline for early departure incentives expires in April, the company said.
Despite the grim outlook, McCormick announced a $330 recognition gift for all 5,000 full- and part-time employees to thank them for the way they responded to adversity in 2008.
The recession, credit market and consumer worries have taken a toll on a number of retailers, including several that have gone out of business, such as Circuit City and KB Toys.
L.L. Bean ended up better than some of its retail counterparts which saw double-digit sales declines, particularly in the fourth quarter as consumers were bombarded with bad economic news, said George Hague, vice president of J. Schmid & Associates, a Kansas-based catalog marketing specialist.
“In the big picture, though I’m certain that they’re disappointed, they didn’t do too badly for the retail market. It was a very difficult holiday season,” he said.
L.L. Bean, for its part, has taken steps to ride out the storm, McCormick said.
The company recognized the downturn early and pulled back on spending, brought in less inventory, hired fewer seasonal workers and avoided resorting to steep discounts, he said. The company also said it was scaling back the number of store openings this year from eight to two.
Spokeswoman Carolyn Beem said the debt-free company is better-positioned than some other retailers to ride out the tough economy.
“We’ve been here for 97 years,” she said Monday. “We’ll be here for another 97.”
The decline in sales in 2008 came in stark contrast to the previous year, when L.L. Bean finished the year with a 5.5 percent increase in sales. Employees were given a far larger bonus totaling about $18.5 million.