SAN FRANCISCO–Williams-Sonoma has outlined companywide cuts, including 1,400 positions, in a bid to reduce its fiscal-year 2009 overhead costs by approximately $75 million.
These actions are being taken in order to align the retailer’s infrastructure with current sales trends and to strengthen its long-term competitive positioning, according to a statement.
They include an 18 percent reduction in full-time head count; the closure of its 38,000-square-foot Camp Hill, Pa., call center; and the closure of a 500,000-square-foot distribution facility in Memphis, Tenn.
The steps will be completed by Jan. 31.
As a result, the retailer expects to incur a pretax charge in the fourth quarter of fiscal-year 2008 of an estimated $14 million to $15 million. Williams-Sonoma expects the cuts to reduce employment and occupancy expenses by about $60 million.
The retailer also expects an additional $15 million in further overhead cost reductions from catalog production, supply-chain operations and information technology.
To that end, the retailer is projecting a reduction in 2009 year-end merchandise inventories in the range of 10 percent to 12 percent versus previous guidance in the range of 7 percent to 10 percent; retail leased square footage growth (net of closures) of approximately 2 percent versus previous guidance of 3 percent; capital spending in the range of $90 million to $100 million versus previous guidance in the range of $95 million to $105 million; and catalog circulation reductions between 15 to 20 percent, which is unchanged from previous guidance.