Restructuring Actions
As you are aware, in February we initiated a strategic restructuring effort to become a more agile and competitive retailer with a clear path toward profitability. As part of our efforts to simplify our organizational structure, today, we are announcing the difficult decision to eliminate approximately 400 full-time positions at our corporate offices and support functions, in addition to certain positions related to our field operations. Accordingly, the following members of the executive leadership team will be departing the company after a brief transition and we wish them well for the future:
• Stephan H. Zoll, President of Online;
• David Pastrana, President of Apparel; and
• Eric Jaffe, Senior Vice President of Shop Your Way.
We highly value the support of all our associates and sincerely thank you for your contributions toward our goals. We are deeply committed to treating those impacted by today’s announcement with the utmost dignity and respect and helping them as they manage their career transition. We will be providing compensation severance and transition assistance for those who are eligible. You should know that the company first eliminated open positions and reduced contract employees in order to minimize the impact on full-time employees.
These organizational changes are in addition to the store closures we initiated last week as we continue to right-size our store footprint and inventory needs in preparation for the upcoming holiday season. Together, these restructuring actions will bring us very close to our goal of achieving $1.25 billion in cost savings by the end of the fiscal year – one of the critical steps we are taking to improve our operational performance.
While we will continue to take all necessary steps to return to profitability, we want to emphasize that our integrated retail strategy will remain driven in part by our brick-and-mortar locations and the hard work of our dedicated associates. To be clear, our company is continuing to fight to become a more competitive and agile retailer. If we keep working toward our transformation goal together, we believe we will return our company to long-term profitability while providing real value to our members.
As a leadership team, we are highly aware that it’s difficult to see friends and co-workers leave the company, but we truly believe these difficult steps will help align our cost structure with the size of the company today.
I want to thank all of you for your continued commitment to improving the performance of our company. We will continue to be open and transparent about our restructuring actions and welcome all questions or feedback from you.