Sales up, but profits down at REI
12/02/2009
Outdoor retailer Recreational Equipment Inc. (REI), the US's largest consumer cooperative, has reported 2008 sales of $1.4 billion, an increase of 6.9% on the previous year. Reflecting the challenging economic environment, the company's operating income for 2008 decreased to $73.6 million, down 31% from 2007. Net income of $14.5 million was down 65% from $41.4 million in 2007. The company's direct sales channel, which includes online and catalogue sales, grew by 14.2%, while comparative store sales increased by only 0.3% in 2008.
Based on a significant business slowdown in the final months of 2008 and continued projected weakness in 2009, the company announced the elimination of 61 full-time jobs, less than 2% of its full-time workforce. In addition, a number of part-time positions were eliminated on a store-by-store basis in about half of the company's 105 retail stores and its distribution centre in Sumner, Washington.
"REI posted positive results for the year because of strong performance prior to the fourth quarter,” said president and chief executive, Sally Jewell. "November and December were very challenging months and our business plan for 2009 is generally flat to last year. While we are financially strong and free of the debt that has challenged so many businesses, we must plan accordingly to this drop in customer demand. This unfortunately means that we must reduce expenses and staffing to align with projected lower sales and workload demands.”
For 2009 REI is planning to make key investments, to position the company, it says, for success when the economy recovers. These investments include plans to open five new retail stores this year and an upgrade to the company's key merchandising systems.
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