Sears to Eliminate 600 More Jobs By Mid-April : Retailing: Thirty-six offices will be closed in the cost-cutting move. A savings of $50 million is expected.
Sears, Roebuck & Co. said Wednesday that it will overhaul the management of its merchandise group, a move that will eliminate 600 jobs by mid-April and save the retailing and financial services conglomerate $50 million.
Sears said it will close its 10 regional offices, including one in Santa Fe Springs, and 26 of its 72 merchandising district offices.
The announcement was the latest step in Sears’ campaign to lower costs and improve the profitability of its retailing unit. The nation’s third-largest retailer has cut or announced plans to remove 40,000 jobs from its merchandise operation since 1990.
Retail industry analysts said Sears is showing its determination to streamline its distribution system and make long-overdue cuts in inflated middle-management ranks.
“All these things are outward signs of inward enlightenment. Sears recognizes that the organization that they built and operated in the 1980s will not be a profit generator in the 1990s,” said Leo Shapiro, a Chicago-based analyst.
Sears also said that it expects to cut some jobs in its Chicago headquarters later this year after completing a study “to determine the best organizational structure in the highly competitive retail environment.”
The company added that it will implement pay changes March 1 for some sales people who work on commission, including employees who sell big-ticket items such as refrigerators and furniture. Sales of such items have slumped because of the recession.
Sears did not detail the changes in compensation, saying only that employees’ pay will be “standardized, designed to be more in line with the competition.”
The office closings announced Wednesday leave 46 district units that will bear greater responsibility for directing the operations of stores in their expanded areas.
Sears has forecast annual savings of $750 million from its job cuts. Last week, the company announced that its 1991 profit rose nearly 42% while revenue was up 2.3%.
Cost reductions in the merchandise group were partly credited for the earnings improvement.
Shapiro said Sears’ distribution network had become more efficient but still wasn’t comparable to that of competitors who have chipped away at the retailer’s customer base.
People affected by the job reductions will be placed in other positions where possible, Sears said.
The offices being closed in addition to Santa Fe Springs are in Chicago; Minneapolis; Memphis, Tenn.; Dallas; Redmond, Wash.; Pittsburgh; Bethesda, Md.; Winter Park, Fla., and Albany, N.Y.
