DALLAS — Southland Corp. said Tuesday that it would eliminate 1,800 jobs during the next few months to cut costs and more efficiently operate its 7-Eleven convenience stores.
The move affects 4% of the company's worldwide work force of 42,600, chiefly in local and district marketing groups and corporate offices.
Southland took a $17.5-million charge in the second quarter to pay for the restructuring, contributing to a $17.9-million loss for the period.
Chief Executive Clark Matthews, who became the company's leader when it emerged from a Chapter 11 bankruptcy reorganization in March, 1991, urged a review of the corporate structure.
Late last year, the company cut back on promotions and item discounting in 7-Eleven stores, began testing new store designs and policed its inventory more aggressively to eliminate slow-selling products.
Matthews said Southland was making "steady progress" with the changes.
"In order to derive the maximum possible benefit from these programs, however, we must reduce our costs to levels more consistent with today's operating environment," he said in a statement.
"I think it's a long overdue step," said Steven Ruggiero, analyst for Donaldson, Lufkin & Jenrette in New York. "Southland going back to pre-bankruptcy was a company that had, in my opinion, a lot of fat."
Employees in stores and Southland's distribution centers will not be affected by the reduction, which is aimed at saving $50 million in costs next year.
The company's second-quarter loss was 4 cents per share. A year ago, Southland earned $19.6 million, or 5 cents a share, in the quarter that ended June 30.
Revenue for the quarter slipped to $1.98 billion from $2.13 billion a year ago.
The company pinned lower sales at comparable stores on its decision not to discount as heavily. Southland also operates 250 fewer stores than it did a year ago.
Analyst Ruggiero said 7-Eleven and other convenience stores have been hurt in the recession by customers holding back on impulse purchases. "Convenience stores by name emphasize convenience and not price points," he said.
Company spokeswoman Cecilia Norwood said Southland will expand its new store concepts from a test market in Austin, Tex., to Detroit and Reno during the third quarter.
The stores use more lighting, wider aisles, supermarket style aisle signs and generally stock fresher foods, including fruit and produce.
Company officials said the new ideas will eventually yield higher sales and profit.
"The whole point is to get organization structured to do a better job of supporting 7-Eleven," Norwood said.
"It's our job to get our operation organized to better support what the store needs for its customers. You don't want to have to go through 10 people to get a decision made."
Southland operates more than 6,300 7-Eleven stores in 31 states. It licenses another 2,400 in several more states and 17 other countries. The company's principal owners--Ito Yokado Co. Ltd. and Seven-Eleven Japan Co.--operate another 4,800 7-Eleven stores.
Southland stock was unchanged at $1.75 a share in NASDAQ trading Tuesday.