Press Release on Company Cutbacks

S&K cuts 50 jobs to trim costs

Struggling Henrico menswear chain also is revising its strategy

Saturday, Jul 26, 2008 – 12:08 AM
By JOHN REID BLACKWELL AND EMILY C. DOOLEY
TIMES-DISPATCH STAFF WRITERS

Menswear retailer S&K Famous Brands said yesterday that it has laid off 50 employees from its Henrico County corporate headquarters and hired a consulting firm to help the company remake its image and turn a profit.

The job cuts, which include some senior management positions, occurred this week, said Joseph A. Oliver III, president and chief executive officer.

Oliver declined to provide details on the positions that were cut. He said the company has about 90 employees remaining at its corporate office, and approximately 200 in the Richmond area including at its six stores.

S&K, which has 218 stores and 1,400 employees in 26 states, is in the midst of an effort to improve its sales and is redesigning stores and introducing new merchandise. In fiscal 2003, S&K earned $2.68 million and continued to turn a profit until this fiscal year — that ended Feb. 2 — when the company reported a $3.93 million loss, according to the company’s annual report.

Sales so far this year have not helped the company turn around.

In the first quarter that ended May 3, the company had $41.1 million in sales, compared with $46.7 million a year earlier. S&K also reported that samestore sales were down 10.8 percent over the previous year.

The total net loss for the company during the first quarter was $1.4 million, according to financial documents.

“Everyone in the apparel industry has been struggling,” Oliver said. “We have been seeing a downward trend in our sales this year. That is part of the reason we feel we need to be aggressive about our new strategic direction.”

S&K has hired the New York-based boutique turnaround firm Alvarez and Marsal to help sell off company assets, evaluate operations and present marketing and merchandising plans to attract a more youthful clientele.

“These are difficult steps,” Oliver said. “And not steps that we enjoy taking, necessarily. The important thing is we believe S&K has loyal customers that we want to continue serving for years to come.”

The company also said it will pursue early lease terminations in stores that are underperforming or do not fit within its strategy changes. Oliver said the company has not committed to a specific number of stores it expects to close.

The company is also converting stores to a new design. Several opened this past spring, and . two newly designed locations will open soon in Ohio and an Atlanta suburb.

The company said the corporate positions were eliminated to reduce annual overhead costs by more than $3.3 million and to focus resources on its strategy.

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