Sears to cut 4,900 salaried jobs over 18 months

Big retailer seeking to bring costs in line with slowing revenue

October 24, 2001|By CHICAGO TRIBUNE

Sears, Roebuck and Co. will slash 4,900 salaried jobs over the next 18 months in an effort to bring its costs in line with slowing revenue.

Some 1,300 positions will be eliminated at Sears' sprawling Hoffman Estates, Ill., headquarters by the end of 2002, according to an internal memo from Sears Chief Executive Officer Alan Lacy. That represents 19 percent of the company's 7,000 headquarters employees.

Another 3,600 positions, or 24 percent, will be cut from Sears' field organization for its full-line department stores over the next 18 months, according to the memo. The field organization, which employs 15,000, consists of district and regional offices around the country that report to headquarters about what's going on in Sears' 860 department stores.

The job cuts - the biggest in eight years for Sears - are expected to be welcome news to a group of Wall Street analysts assembled here today to hear Lacy discuss his strategy and cost-reduction efforts as well as the retailer's third-quarter results. But Sears' work force is likely to be unsettled by the cuts as well as by the timetable, which will draw out the process into 2003, Lacy acknowledged in the memo.

"This period will test our ability to stay focused on accomplishing our business objectives and stay aligned as a high-performance team," Lacy wrote. "Our future depends on our commitment to listen to our customers and make the operational improvements required to better serve them and as a result to drive profitable growth."

Laid-off employees will receive severance packages as well as outplacement services, according to Sears spokesman Ron Culp.

Sears is wise to make changes in its bureaucratic field organization, said Sid Doolittle, retail consultant with Chicago's McMillan/Doolittle.

"The field organization is the fattest part. That's where they have the most opportunity for consolidation," he said.

While the cuts may help Sears be more efficient in the long run, they will create strain in the short run, Doolittle said, as the remaining people try to do the work of those who have left.

"They're going to have eliminate some work. That will be the big question. What are you going to do about the work?"

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