Head Sports reassigns, lays off 20 employees

June 16, 1995|By Mark Guidera | Mark Guidera,Sun Staff Writer

A year after it forecast a dramatically upbeat future, Head Sports Wear Inc. has laid off or reassigned about 17 percent of its work force at its Columbia headquarters in response to hard times in its core markets, tennis and ski apparel and equipment.

The company also has closed the outlet store at its headquarters on Red Branch Road in East Columbia, once touted as a goodwill gesture to the local community. The store likely was a victim of the area's increasingly tough retail competition.

The layoffs and reassignments at the 29-year-old company are part of a restructuring largely driven by troubles at Head's parent company, HTM Sports Holding, B.V. The Dutch company was pulled from the brink of insolvency in April with a cash

infusion of more than $40 million from its Austrian owner.

Before this year's downsizing, Head employed 116 workers at its Columbia headquarters and regional distribution plant in Jessup. Officials said about 20 people have been laid off, relocated or had their salaried jobs switched to ones in which compensation is based on performance.

"For some people, the restructuring is very good news, and for some it's bad, but the company had to become leaner, more productive for the '90s," said Jack Dougherty, Head Sports Wear's chief executive officer and international president. "What happening at Head is healthy and certainly consistent with trends in the '90s."

But John Horan, publisher of Sporting Goods Intelligence, an industry newsletter, said the restructuring at Head results from market trends in the ski and tennis apparel and equipment industries, HTM Sports Holding's main markets.

Both markets have seen flat sales in recent years, he said, and this year's mild winter in the Northeast and Midwest further soured sales of ski apparel and equipment.

The poor market weighed HTM with losses. In late April, HTM's owner, Austrian conglomerate Austria Taback, pumped about $42 million into the company to keep it from bankruptcy, two European news agencies have reported.

HTM operates Head Sports Wear, which markets apparel and shoes, and Head Sports Inc., which markets tennis, ski and golf equipment.

Sales increase forecast

Last summer, Head Sports Wear was expecting to boost its profitability. It had seen U.S. sales decline from from $70 million in 1989 to $61 million in 1994.

The company projected sales would jump to $93 million this year as a result of several new strategies, including marketing new lines of outdoor and athletic clothing and shoes and aiming for a wider, younger market by selling those products in "category killer" stores such as Sports Authority.

Mr. Dougherty declined to say if Head Sports Wear was on track to meet that sales goal.

In an effort to appeal to the youth market, Head last summer signed boxing champ Evander Holyfield to an endorsement contract.

The deal was frowned on by some analysts because boxing seemed incongruous with Head's history as a tennis and ski company.

In its effort to salvage HTM, Austria Taback hired a consultant to recommend improvements.

A key suggestion for Head Sports Wear: Shift middle-management employees from salaried positions to a pay-per-performance basis. About five people will be affected by that change, Mr. Dougherty said. "Some will actually do better financially under this system," he said.

As for the layoffs last month, they were in administrative and support staff jobs, he said.

Mr. Dougherty said some of the Columbia employees who were shifted into performance-based jobs also have been reassigned to work close to the markets they serve.

Designers move

Another change for the Columbia headquarters is that its apparel and shoe design department has been moved to Princeton, N.J., so designers could be closer to the fashion industry in New York City.

Mr. Horan, the industry analyst, said he believes that HTM will continue to downsize and that could result in other Head offices in the United States closing.

However, he said he expects Head's Columbia office to remain open.

As for the outlet store, which admitted only Howard County residents, Mr. Dougherty said it was closed because Head "needed the space" for its headquarters.

Mr. Horan said the outlet was probably shuttered because of low customer traffic.

"Why else do you close a store?" he said.

Second closing

The outlet may have been hurt by increasing competition in the area from discount apparel retailers, which opened in Columbia in the past two years, including heavyweights Marshall's and Upton's.

This marks the second time the Columbia outlet has been closed.

The outlet was open from the late 1970s to the early 1980s. It reopened last summer with fanfare, including a guest appearance by rap music star M. C. Hammer.

At the time, Head executives said the store was part of a new effort to develop stronger local name recognition and reduce overstocks that were being sold to national clothing discounters -- sales that undermined Head's upscale image.

Mr. Dougherty said that although the company closed the Columbia store, outlets in Boulder, Colo., and San Marcos, Texas, remain open.

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