Framingham, Mass. — Marketers attribute Bose’s planned cut of about 10 percent of its workforce, or roughly 1,000 employees, to a sharp drop in vehicle sales, and not simply to a steep decline in consumer spending at retail stores.
Bose, whose sales have been estimated at $2 billion, is a major supplier of OEM sound systems to automakers, whose U.S. sales fell at double-digit rates in 2008. The company also supplied products to Tweeter, which liquidated at the end of last year, and Circuit City, which is in the process of liquidating. 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, but 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 a statement, the privately held company 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 said.
Although cuts could include employees at Bose’s company-operated mall and factory-outlet stores, the company might not close many or any of its more than 175 locations. More than a dozen stores contacted by TWICE in the East and West coasts have not been informed that their stores would be closing.
One former retail executive also pointed out that breaking a lease at a mall or factory-outlet center 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.”
In its statement, Bose said the company 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."