By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Bose said it doesn’t plan to close any of its more than 175 company-owned stores despite plans to cut its workforce by about 10 percent, or roughly 1,000 employees, a spokeswoman told TWICE.
The audio company, however, declined to say anything more beyond a prepared statement in which it said it is “restructuring its operations in response to the decline of the global economy and its impact on consumer spending.” Employee cuts will occur in “select areas, including manufacturing,” the statement added.
Bose didn’t say whether its OEM audio business to automakers was mainly responsible for the layoffs, but the privately held company, whose sales have been estimated at $2 billion, is a major supplier of OEM sound systems to automakers, whose U.S. sales plunged to 13.5 million vehicles in 2008 from a year-ago 16.2 million.
The company’s consumer audio businesses have also likely suffered in the current recession. Bose, for example, supplied products to Tweeter, which liquidated at the end of last year, and Circuit City, which is in the process of closing. (See p. 1.) Bose was listed in court documents as an unsecured creditor owed $472,410 by Tweeter. The amount owed by Circuit City to Bose isn’t clear. Court documents show Bose is not among Circuit City’s top 50 unsecured creditors. Circuit’s 50th top creditor is owed $1.53 million.
In its statement, Bose said that it has been “staffed for a growing economy, not a global recession. As a global company, we are responding to these challenges. Our corporate headquarters is in Massachusetts, and the Massachusetts workforce is impacted; however, we will not be disclosing other details, including specifics on the facilities or regions affected.”
In other cost-cutting initiatives, TWICE learned, Bose cut travel by its dealer account reps. “My rep usually visits, but a week ago, he said Bose cut all travel by account reps until further notice,” a retailer told TWICE. “But secret shoppers and detailers still come.”
As to the potential for closing select company stores, which are located mainly in malls and factory-outlet centers, a former retail executive pointed out that breaking a mall or factory-outlet lease is costly. “It’s hard to buy your way out of a mall lease unless you’re bankrupt,” he said. “It’s cheaper to keep an unprofitable store open than to buy out the lease.” Factory-outlet landlords are “a little more negotiable,” he said, but “it wouldn’t surprise me if Bose didn’t close any stores because the stores help them sell stuff.”
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.