L.L. Bean is laying off 100 workers, scaling back employee health insurance benefits and withholding pay performance bonuses for the first time in 10 years, the Portland Press Herald reports. There will be a net loss of 400 workers, according to CEO Steve Smith, who said that in addition to those 100, about 500 workers "took advantage of a voluntary early-retirement program," CNBC reports. Some of those positions will be refilled.
In a memo to staff obtained by the Press Herald, President and CEO Steve Smith told employees that 2017 was a rough year in a generally tough retail environment, with costly snafus in new fulfillment and human resources systems and increased expenses from an early retirement offer — all occurring amid flat sales.
The outdoor apparel company has also nixed a new plan to sell coats and boots with Internet of Things sensors embedded in them, according to the Wall Street Journal. Retail Dive's request to L.L. Bean about the news wasn't immediately returned.
L.L. Bean is working on several fronts to rein in costs amid ebbing sales. Last month the iconic bootmaker stunned customers with the reversal of its longstanding liberal return policy for used or damaged merchandise, which was being abused 15% of the time, CEO Stephen Smith told the Portland Press Herald in February— double the rate a few years ago.
The company has also ended its 17-year-old no-minimum free shipping policy, instead requiring a minimum $50 purchase to encourage larger orders. Experts told Retail Dive that L.L. Bean likely has data demonstrating that the old policy had become untenable in an area of online resale marketplaces like eBay. While likely necessary, changes to the generous policy, along with cutting jobs and benefits, could taint L.L. Bean's image: The outdoors retailer is well-regarded as one of the most human businesses with customer service that ranks even higher than Amazon's.
The changes to the shipping and return policy had been mulled for a year, and those, plus the layoffs and benefits changes revealed last week, are arriving in the tenure of Smith, who joined in 2015 and had held executive positions at Walmart.
The retailer has remained strong in many ways, in recent years experiencing a surge in popularity, to the point of having supply issues of its iconic hunting boot, now a favorite of hipsters, college kids and fashion mavens, and not just its traditional customer. That has helped fuel holiday sales, but Smith said that otherwise sales have been flat.
The company has shifted from its legacy as a catalog and more recently an e-commerce retailer to open more stores, now running 35. Last year L.L Bean opened six new locations in the U.S. and has plans to open five more this year, according to the Press Herald.