In a dramatic cost-cutting move, home furnishings retailer Williams-Sonoma Inc. said Wednesday that it would cut 18% of its workforce, reduce its inventory and close a call center and distribution facility.
The San Francisco-based company, which is also parent of the Pottery Barn chain, said the series of actions would reduce costs by about $75 million in fiscal 2009.
The announcement came on yet another day of bad news for the retail industry. Women's retailer Charlotte Russe Holding Inc. said it was considering a sale of the company.
Phillips-Van Heusen Corp., which owns several clothing brands including Calvin Klein, said it would close about 175 stores and eliminate 400 positions.
Meanwhile, price reductions continue. Upscale accessories chain Coach Inc. said it was lowering its prices on key styles 10% to 15%.
"In desperate times, you need to enact desperate measures," said Jackie Fernandez, a retail partner at accounting firm Deloitte & Touche.
"January is going to be a rough month for a lot of retailers."
Williams-Sonoma said that by the end of the month it would cut 1,400 positions and would shut down a call center in Pennsylvania and a distribution facility in Tennessee.
"All of these initiatives will allow us to maintain our financial flexibility while at the same time focus on those strategic objectives that will enhance our competitive positioning when these macro head winds subside," Chief Executive Howard Lester said in a statement.
Faced with job insecurity and a severe mortgage crisis, consumers have not flocked to buy the high-end home furnishings that Williams-Sonoma and its associated brands sell. This month, the company reported a 24.2% decrease in 2008 same-store holiday sales compared with the same period a year earlier.
Also on Wednesday, Coach executives announced plans to lower prices as much as 15% on handbags and other accessories.
Mike Tucci, president of North American retail, told analysts during a conference call that the company would also bring more of its handbag prices into the "sweet spot below $300."
"We will exploit this opportunity by designing into this price point, engineering collections that can provide this exceptional value to our consumers and generate excellent margins at the same time," he said. The lower prices will help the company "gain share in a changed consumer marketplace."
A Coach spokeswoman said the reductions would bring the average price of a Coach handbag to less than $300 later this year; currently, the average price for one of the company's handbags is about $335, she said.
Industry experts said more cost-cutting measures were sure to emerge in coming weeks as retailers struggled to stay afloat.
"This is probably the worst I've seen," Fernandez of Deloitte & Touche said. "Retail is very cyclical -- we've had very up years and we've had very down years, but in the down years it's never gotten to this point."