After a disappointing Christmas shopping season, Lillian Vernon had to lay off 25 percent of its workforce on December 20.
Commenting on the reason for the lay offs, company CEO/president Michael Muoio said, “The most damaging was the postal rate increase of 20%. Basically, Fed Ex and the U.S. Postal Service reached down into our pocket and took out $8 million. For us, there was no choice.” There was also a 25 percent increase in parcel carrier rates as well.
Another element that has hurt the company has been the eroding value of the U.S. dollar.
Revenue at the company has dropped from $287 million for their fiscal year in 2001, to about $180 million as of August 2006.
Muir added that he thinks many of the catalog companies operating in the $20-$30 million range will continue to be under strong pressure in the immediate future.
He said the future for Lillian Vernon will be a smaller comapny. “We just have to become a smaller business. We might be in front of the curve, but I think there will be a lot of this," he said.
After the job cuts, the company retains about 500 workers.
Sponsored link: The outsourcing every manager requires - Tampa Locksmith
Comment Preview