Libbey Lays Down a Path for Growth
Libbey CEO Stephanie Streeter is focused on increasing profitability worldwide and keeping costs down.
By Allison Zisko
If you ever needed a model of a solid and steady tabletop company, one that has successfully weathered the economic storms and continues to grow, it would be Libbey.
It maintains a perennial position on HFN's ranking of the top 20 home furnishings vendors (number 18 this year, based on 2011 sales) and, after struggling in the early years of the recession has rebounded and consistently grown its retail business at home and abroad over the past few years. It achieved this through an apparently seamless leadership transition in which Stephanie Streeter joined the company as CEO in June last year, succeeding John Meier, who retired after a 41-year career.
"Libbey's well-known brand equity and rich consumer heritage have been hallmarks of the company which we intend to build upon," Streeter told HFN. Asked to outline the company's retail strengths, Streeter pointed to "a passion for new product development" and products that "help our retailers offer fashion and newness, maximize impulse sales and create value."
Glassware sales to U.S. and Canadian retail customers increased 7 percent during the second quarter of 2012. Streeter attributed that growth to Libbey's new products and programs that offer "solutions," such as its Craft Brew collection, which capitalizes on the foodservice trend of offering the right glass for the right beer, and the Just Tasting line of appetizer and dessert serveware that taps the growing trend toward small portions. Both are examples of how Libbey has expanded beyond its beverageware core into specialty drinkware and serveware, in addition to offering dinnerware, home decor and entertainment solutions.
Second-quarter sales in China increased 24 percent. Otherwise, Libbey's overseas business has experienced a slowdown.
"All of Europe is experiencing a malaise," Streeter said when asked about economic uncertainties in Spain and Portugal. "It may be more acute in some countries than others ... it's impacting all manufacturing.
"Many companies have taken precautions to ensure [or] try to hedge their bets to make sure they don't get caught short."
Libbey fared well in Europe in the first half of the year, Streeter said, all things considered. Sales were down 2 percent in the first quarter and 6 percent in the second quarter, on a currency-adjusted basis. "We're only down in the low single digits. And our retail business there is hanging in there really well," Streeter said.
Streeter, who was interim CEO of the United States Olympic Committee from March 2009 to March 2010 and prior to that was chairman, president and CEO of Banta Corporation, a printing and supply-chain management company, recently announced a new strategic plan to cut costs in North America, maximize opportunities in Mexico, increase growth in China and increase profitability in Europe.
"In China, we will leverage our new expanded distribution network to capture a share of the rapidly growing tabletop glassware business there," she said. "Our plant in Langfang, the newest in our system, is running well and producing high-quality product. We have a talented workforce in China and we believe there is some tremendous upside opportunity there.
"In Europe, we have identified opportunities to streamline the organization, improve our productivity and better leverage our resources," Streeter said. "The economic climate in Europe is challenging, and it's a tough marketplace in glass. However, we have very strong production capability in the Netherlands and Portugal. We can generate higher cash and profit returns by improving internal processes and focusing on a product mix that really fits the needs of our diverse European customers."
Part of the new strategy includes a regionally based leadership structure. The company has been organized into three regions. In the Americas, Dan Ibele serves as vice president and general manager for the United States and Canada, and Salvador Minarro is vice president and general manager of Mexico and Latin America. Ibele was formerly vice president of global sales and marketing. Minarro has been the general manager of Libbey Mexico. Gary Moreau, formerly general manager of Libbey China, is vice president and general manager of Asia Pacific. Ibele, Minarro and Moreau all report to Streeter. The company is conducting a search for a general manager for the Europe, Middle East and Africa region.
Streeter said that most of Libbey's customers--as well as market dynamics, competitor activity and channel differentiation--are regional in nature. "This new structure will enable our people to react more efficiently and effectively to changes in their markets," she said. "It will also create new, more exciting career-path opportunities for our associates."
Dick Reynolds, Libbey's former chief financial officer, will lead a strategy program management office to oversee the new plan.
The reorganization did lead to layoffs for about 5 percent of its global professional and administrative workforce, where job responsibilities overlapped. "Layoffs are very difficult decisions which we don't take lightly at Libbey," Streeter said.
Looking ahead, Streeter said capital spending will follow earlier guidance. "We're not paring back. Where we want to invest and grow we will do that."
Streeter's outlook for the remainder of this year and for 2013 is relatively good. "We're cautiously optimistic in North America and we would remain that way in 2013," she said. "It will be tough. There are signs of a recession. We are taking steps to make ourselves stronger. We continue to expand beyond beverageware to home decor and entertainment solutions, make sure we're trend-right and make sure we are cost-competitive."