Wednesday, January 28, 2009

Sad News Everywhere

After Saks Fifth Avenue released the information to their employees that there would be cuts across the board I thought my friend won't be affected (the one who sent me the info)...then, I read it all over every fashion website and then the sad news hit...she was let go...I didn't share because it was pretty close to home...and then, I read....MICHAEL FINK was let go!!!!!! The man that I wanted to work for the whole time I worked at Saks....I seriously can't believe it...I wonder who is going to take his place in the fashion office?  WOW!
Then, I read in an email from WWD that my FAVORITE decorating magazine, Domino magazine is being cut....too much sad news...when will it get better?
Here is the letter that was sent out to Saks associates on January 15th stating that there would be some change:

TO:     All Associates

FROM:   Steve Sadove, Chairman and CEO

DATE:   January 15, 2009       

We are currently facing some of the most difficult economic conditions we have faced in our 84-year history.  It is likely that this environment will persist through 2009 and perhaps beyond.  We are taking a series of necessary actions related to expenses, capital spending, and inventory receipts in response to the deteriorating environment and to better position the Company for the future.

We have an exceptional brand, valuable real estate, a loyal customer base, solid vendor relationships, and most importantly, an outstanding and talented team.  Unfortunately, even all of our strengths and nimbleness can't completely insulate Saks from the very severe and broad-based challenges of this economic downturn.  We will succeed if we have a collective commitment to adapt, to innovate, and to make some very difficult choices.  While we are staying the course with our long-term strategies, we are making prudent adjustments to our organization and our operations that are needed in this environment. 

We will reduce our expenses by approximately $50 to $60 million in 2009 which will create a more efficient organization and more closely align our cost structure to the size of the current business.  Some of these measures will result in job eliminations while others will affect our compensation and employee benefit plans.  Additionally, we have identified several other non-payroll and benefit-related cost reductions, primarily in the areas of procurement, information technology, distribution and logistics, travel, and marketing. 

We will immediately begin a company-wide reduction in our workforce of approximately 1,100 positions, or 9% of our associate base.  In addition, we are eliminating 2009 merit-based wage increases for all associates and suspending the 401(k) Plan Company match for a minimum of one year, beginning January 1, 2009.  Associates will still be able to contribute to the 401(k) Plan to take advantage of tax-deferred savings for their future.  We are also suspending the Employee Stock Purchase Plan for 2009 effective January 1, eliminating the Tuition Reimbursement and Employee Referral programs effective January 16, and suspending future benefit accruals for the limited number of associates remaining in the Company's pension plan effective March 13.

Specific details of the changes and how they affect you and your group will be communicated by a member of your management team as quickly as possible.  We realize that these changes are very difficult, and we are committed to treating our affected associates with care and respect.  Eligible associates will be given appropriate severance packages. 

Members of Saks' leadership team have worked tirelessly, responsibly, thoughtfully, and carefully to make these hard decisions and to create a more efficient, focused, and right-sized organization.  This process has not been an easy one, but the changes we are making are critical to our future. 

We are also lowering our 2009 capital expenditures to approximately $60 million, a decrease of over 50% from 2008 spending, and our 2009 inventory receipts by approximately 20% from 2008 levels.

We operate today in a state of constant evolution and continuous change.  The true measure of an organization is how it deals with change and overcomes challenges.  I know that we are up to the task and that together we will overcome the difficulties facing us and go on to even greater achievements. 

Saying goodbye to friends and co-workers is never easy, particularly when many of us have worked so hard and so long together.  For those of you that will be leaving Saks, we are very grateful for your many contributions to our organization.  We thank you, and we wish you the best in the future.

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