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Cuts in Chatsworth Reflect Lower Sales, Analysts Say : Vidal Sassoon Plans to Lay Off 100-125

Times Staff Writer

Vidal Sassoon Inc. will lay off between 100 and 125 workers in Los Angeles by Nov. 6 in a move that Wall Street analysts described as symptomatic of sharply lower sales at the hair-care company.

Richardson-Vicks Inc., the Wilton, Conn., conglomerate that bought Sassoon two years ago, said most of the layoffs will be in Chatsworth, where the company will end most distribution and warehouse functions but retain research and development. The rest of the cuts will be made at Sassoon headquarters in Century City, a spokesman said.

The layoffs, amounting to roughly a third of Sassoon’s work force, are simply an attempt to exploit economies of scale and avoid duplication, spokesman Malcolm MacGruer said. But Wall Street analysts said they reflect troubles at the once-booming hair-care concern, founded by former London shampoo boy Vidal Sassoon, who remains as chairman.

Richardson-Vicks does not break out figures for Sassoon, but analysts estimate that the unit’s revenue will be off anywhere from 10% to 25% when its fiscal year ends June 30. Brenda Lee Landry, a vice president at Morgan, Stanley in New York, said sales are expected to drop from about $115 million to as little as $85 million.

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“The hair-care industry has become much more competitive,” said Emma Hill, a vice president with Wertheim & Co. in New York.

Analysts also said Richardson-Vicks has had troubles of its own lately and has been trying to cut costs for some time. They noted, too, that Sassoon was doing well before it was sold to the $1.3-billion-a-year consumer products conglomerate.

Richardson-Vicks “has a reputation of being very poorly managed,” said James Waggoner, an analyst at Bear, Stearns. “Sassoon, when it was acquired, had a reputation of being very well managed.”

For the quarter ended March 31, Richardson-Vicks reported flat earnings of $12.7 million on sales of $297.1 million, compared to earnings of $12.6 million on sales of $291 million for the comparable period a year earlier.

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MacGruer said that the company announced the layoffs internally May 3, giving employees up to six months to find other jobs, but that the cutbacks were not disclosed publicly at the time.

He said the biggest cutback would come at Sassoon’s 92,000-square-foot warehouse and distribution outlet in Chatsworth. After the cutbacks are completed, he said, Sassoon products will be shipped from Richardson-Vicks plants in Hatboro and Fort Washington, Pa., and Greensboro, N.C., where most of the Sassoon line already is produced. Some backup distribution capacity will be retained in Chatsworth, he added.

Vidal Sassoon himself was unavailable for comment; his secretary said he was traveling overseas. An aide said Sassoon’s president, Peter Wilson, declined to be interviewed about the layoffs.

Sassoon beauty salons are unaffected by the layoffs. The company said they are operated by another firm under a licensing agreement.

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