Carter Hawley Hale Begins Dismissing 350 of Its Workers
Carter Hawley Hale Stores, carrying out the first step of a retrenchment intended to turn around the company, on Friday said it began dismissing 350 employees.
A spokesman for the Los Angeles-based retailer, parent of the Broadway-Southern California, also reported that Carter Hawley will cut about 650 more jobs over the next 90 days by leaving current openings unfilled and through further attrition. In all, about 1,000 of the 30,000 jobs at Carter Hawley’s four Western department store chains and at its administrative offices will be eliminated, the spokesman said.
Separately, a Carter Hawley executive said the company foresees no problem getting enough merchandise from suppliers as it heads into the Christmas shopping season. Carter Hawley has come under criticism lately from three major credit agencies, which contend that the retailer has been late in paying bills and have urged suppliers to use caution in shipping goods.
The company’s disclosures Friday about the job-cutback program clarified previous statements that it had made. When company executives announced Oct. 9 that they would eliminate 1,000 jobs, including 400 in Southern California, they said it would take 12 to 18 months.
In addition, Carter Hawley Senior Vice President Edwin J. Holman said Oct. 9 that “our plan today is not to lay off people. Our plan is to manage this through attrition.”
Company spokesman Bill Dombrowski said there has been no change in Carter Hawley’s original retrenchment plan. He said the previous statement about the cutbacks taking 12 to 18 months was a misstatement on his part.
Holman on Friday stood by his previous remark that there would be no layoffs, but suggested that it was misinterpreted. He said the company always had expected to eliminate some workers to achieve the 1,000 job cuts.
“I don’t see this . . . as a layoff,” Holman said. “It’s a job elimination. A layoff is when you bring some people back after a period of time.”
The 350 dismissals, executives said, mainly involve office workers, stock handlers, other sales support staffers and mid-level managers. However, executives also were dismissed, including some divisional and corporate vice presidents. Dombrowski would not disclose which vice presidents were cut, what severance benefits will be granted or precisely how many dismissals are in Southern California.
Edward Weller, an analyst with Montgomery Securities, said the job cuts will financially help Carter Hawley, which lost $26 million in the fiscal year ended Aug. 4.
“I guess they’re trying to improve their profits and stabilize their financial picture” by reducing the work force, Weller said.
Earlier this month, Carter Hawley announced that it had agreed to sell its Thalhimers chain in the Southeast to May Department Stores for $325 million. The move was intended to help Carter Hawley focus on its four Western chains and cut costs.
Separately, H. Michael Hecht, chairman of Broadway-Southern California and a Carter Hawley executive vice president, said the company has received more than enough merchandise from its suppliers lately. “There’s absolutely no problem,” he said.
At least three big credit agencies, saying that Carter Hawley is paying too many of its bills late, have urged apparel firms recently to ship merchandise to the company’s stores “cautiously.”
Murray Maxwell, executive vice president of Bernard Sands Credit Consultants, said Carter Hawley “is way past due all over the market.”
Every retailer with losses and heavy debts is worrying suppliers and their lenders, said Richard Posner, executive vice president of the consulting firm Credit Exchange Inc. In Carter Hawley’s case, he contended, the company is making suppliers even more jittery by paying slowly.
Some small suppliers, such as New York’s Val Mode Inc., which makes women’s robes and nightgowns, are taking the credit agencies’ cautionary advice on Carter Hawley to heart. “We’re waiting to get paid on everything they owe us, and then we’ll decide whether to ship to them again,” said Janis Miller, Val Mode’s chief financial officer. She said Carter Hawley is late on $180,000 in payments.
Carter Hawley denies Val Mode’s account, saying it stems from a long-time billing dispute.
Last week one of the apparel industry’s powerhouse financiers, CIT Group/Factoring, briefly said it might curb credit for major shipments to Carter Hawley stores if the retailer didn’t start paying bills more quickly.
CIT’s chairman and chief executive, Francis X. Basile, threatened in an interview to hold back credit for shipments to Carter Hawley department stores because he was “very disturbed” about supposedly overdue bills. But this week Basile, whose firm finances roughly 5% of Carter Hawley’s merchandise, promised to keep credit flowing. Management, he says, “has demonstrated to us that they’re willing to work with us in clearing up some of their past dues (late payments).”
Carter Hawley executives vigorously deny that they are paying bills slowly, and they say CIT’s support for the company was never in doubt.
The company attributes suppliers’ concerns to the closer scrutiny that debt-heavy retailers have come under since Campeau’s department stores sought Chapter 11 bankruptcy court protection in January.
Moreover, company executives say, the vast majority of Carter Hawley’s more than 15,000 suppliers aren’t complaining. “At any point in time, you can find a couple hundred who are unhappy with us. That’s a very small percent,” Hecht said.
