Bean curtails expansion, faces potential layoffs
FREEPORT — Maine retail icon L.L. Bean is feeling the economic squeeze.
With net revenue last year down nearly 8 percent from 2007, Chief Executive Officer Chris McCormick told employees in a letter distributed Monday to expect "further reduction in sales in 2009" that will force the company to "resize and restructure the business to match the projected decline in sales and work volume."
"The 2009 budget, the most difficult in my career, strikes the appropriate balance of cost cutting while continuing to invest in our future," he said.
McCormick said initial response to a voluntary early retirement program leaves him "cautiously optimistic" the company will be able to limit employee layoffs.
Bean has also slashed plans to expand its network of stores.
Company spokeswoman Carolyn Beem said as recently as 15 months ago L.L. Bean expected to move forward with seven or eight new stores this year. Now, the company has plans to open only one store, in Dedham, Mass., this summer. Looking to the future, she said no leases have been signed and no new properties have been identified.
She said that in order to counter some of the declining revenue, the company has created a bare-bones budget for its existing 15 outlet and 13 retail stores. It has also hired fewer seasonal employees, brought in less inventory, reduced travel expenses and has eliminated employee bonuses. Full- and part-time employees normally receive a bonus of 5 percent of their total wages, Beem said, but this year the 5,000 eligible employees each received a flat $330 gift.
Beem said a salary and wage freeze that took place earlier this year has helped to save 75 to 100 jobs, and the early retirement program is available to employees 55 and older who have worked for Bean at least five years.
The company will not know how many layoffs are required until the middle of April, when the early retirement offer expires.
L.L. Bean is a private company, and according to Beem, is in a better economic position than other retail businesses because it has not incurred a lot of debt.
McCormick's letter encouraged employees to prepare for the worst, but hope for the best.
"We will remain flexible throughout the year and will respond appropriately as business conditions change," he said. "We will get through this economic storm by staying true to our principles and values that make us the industry leader."