TRENTON, N.J. — Nabisco Holdings Corp., maker of snack mainstays such as Oreo cookies and Ritz crackers, moved Monday to cut nearly 8% of its work force in a restructuring that reflects increased competition among food companies.
The subsidiary of food and tobacco conglomerate RJR Nabisco Inc. said it is making changes that will cut its overhead by about $200 million a year and "accelerate strong, sustainable earnings growth into the next century."
In contrast to other job-slashing news that has cheered investors in recent months, Wall Street showed little reaction. RJR Nabisco shares rose 25 cents to $32.875. Shares of Nabisco Holdings were unchanged at $35.75. Both trade on the New York Stock Exchange.
Nabisco said it will cut 4,200 jobs from the current 54,000, splitting the reductions between its U.S. and foreign operations.
The company also said it will move the headquarters of its Planters Co. and Life Savers Co. from Winston-Salem, N.C., to Parsippany, N.J., where its other offices are. Other operations will also move to New Jersey, leaving all the company's major domestic operating companies there.
The company said it will eliminate smaller brands that generate slight profits so as to devote its resources to its bigger sellers. It said it will reduce its earnings this year by $338 million to set aside enough money to pay for severance costs and other charges associated with the restructuring.
Nabisco makes many of the best-known names in U.S. supermarkets; besides Oreo, Ritz, Life Savers and Planters, they include SnackWell's, Chips Ahoy!, Grey Poupon, Parkay and Fleischmann's. It markets more than 8,000 products in more than 87 countries.
The restructuring comes after a brawl between RJR management and outside investors who unsuccessfully sought a hastened separation of the food and tobacco businesses. The investors group argued that the uncertainty of the cigarette industry's future was depressing the value of Nabisco's food products and that both the food and tobacco businesses would increase in value if they weren't linked. Management said it was not opposed to the idea but that making the split as quickly as the investors group wanted would be premature.
Analysts said they believe that although boosting earnings will make Nabisco more attractive, the restructuring is not part of a plan for eventual autonomy of the food business.
"They wouldn't do it for that alone," said Edward A. Froelich, vice president at Pershing-Division at Donaldson Lufkin & Jenrette in Jersey City, N.J.
"They're not gonna spin it off until '98 at the earliest," added John C. Maxwell Jr., managing director at Wheat First Butcher & Singer in Richmond, Va.
Froelich said the restructuring is a response to cost and reductions and price slashing elsewhere in the food industry, particularly by cereal makers.
Maxwell said the restructuring is intended only to improve "overall profitability and outlook" and that it should benefit Nabisco by next year.
"They would have done this with or without a spinoff" plan, agreed John M. McMillin, analyst at Prudential Securities Research in New York. "The bottom line is there's increased pressure on RJR Nabisco and Nabisco to generate earnings growth."
RJR Nabisco, the nation's No. 2 cigarette maker with such brands as Winston and Salem, owns 80.5% of Nabisco Holdings. RJR stock has recently been the worst performer among tobacco companies.
After several strong quarters fueled by the successful introduction of the SnackWell's line, Nabisco's earnings began to slide in the second half of 1995; profit plunged 20% for the July-September quarter. Earnings rebounded for the first quarter of this year, but the company has said sales, particularly in the U.S., have been flat.