Harry & David cuts 10% of its work force

Text Size: A | A | A

Print this Article Email this Article

January 16, 2009

By Greg Stiles

Mail Tribune

Harry & David Holdings on Thursday slashed more than 100 salaried and full-time positions, or about 10 percent of its nationwide staff of 1,100.

The Medford-based gourmet food and gift retailer blamed deteriorating sales for layoffs that will hit all levels and functions of the company except its retail stores. About 80 people lost their jobs and another 25 positions will go unfilled at its south Medford location. The firm's Hopewell, Ohio, plant saw a handful of its roughly 110 employees let go as well.

"These are always terrible days," said Bill Williams, president and chief executive officer of Harry & David Holdings Inc. "This reduction in staffing has been one of the most difficult decisions for the company in its 75-year history. We lost a lot of long-term, and some short-term, colleagues that will be missed."

Williams said both business-to-business gift-buying — long a key component of sales — and consumer purchases declined.

"We didn't know how Christmas was going to turn out until after December," Williams said. "But it was a possibility we recognized early on. After taking many other expense reduction measures, we were left with no option except to downsize staff."

Williams said affected employees were notified individually Thursday morning and later met with human resources staff. They will receive severance payments and outplacement assistance.

"We're not anticipating more layoffs," Williams said. "But circumstances can always change."

Harry & David previously took other measures to reduce expenses by cutting discretionary spending and capital expenditures; freezing wages and salaries; and suspending the company match to the employee 401(k) plan. For the second year in a row, the company will not pay bonuses.

Williams said the company reorganized its sales and marketing departments earlier in the week, forming a brand positioning and product innovation group and a merchandising and buying group.

"We created certain vacancies and created some new jobs when we did that," Williams said. "What we looked for was efficiency and some areas to reorganize around sales volume. The cuts we made were not equal through all areas of the business."

Bill Hoke, Medford's assistant city manager and economic development chief, said Harry & David's layoffs hurt all the more because they come at a time when there are already a lot of people looking for work.

"It will probably mean more people looking for jobs where they may be underemployed," Hoke said. "We don't have an excessive amount of job openings to absorb a sizable amount of people (looking for work)."

The news comes a day after Medford-based Asante Health Systems, which operates Rogue Valley Medical Center, announced it was eliminating 100 jobs.

Hoke said the cuts will ripple through the community in many ways.

"There's a trickle-down effect, with fewer dollars available to spend on consumer goods at the store or for house and rent payments," Hoke said. "It affects everything from durable goods right on down. The impact is finally showing a little bit stronger in our region. In the past, we've been fairly well insulated from regional downturns. When the tech bubble popped we were insulated, but this economy has such far-reaching impacts that no one is immune any more."

People with technical expertise are likely to be underemployed in the months ahead, Hoke said. "Some won't get a job, some will move and some will go on unemployment."

Harry & David finds itself in similar territory to many manufacturers across the country, said Tom Bradley, who worked for the company between 2000 and 2003.

"Yet another profitable organization is looking ahead and realizing demand for nonessential goods and services is going to be lower than in the past," said Bradley, who is now involved in commercial real estate. "Everyone is planning for the survival of their organization. Unfortunately, that means jobs are being pushed aside and nonessential expenses are cut.

"These are the sorts of times in our lives and society that for all of us to survive we have to pull together and help each other out. There are going to be more layoffs and contraction ahead; this is the kind of thing that can bring the community closer to together."

Harry & David first gained notoriety during the Great Depression.

"This was a company born out of tough times," said Brad Hicks, president and chief executive officer of the Chamber of Medford/Jackson County. "I'm sure they are doing everything they need to do to keep that tradition and stay around for another 75 years and beyond. The thing I'm pleased with is that layoffs were really the last consideration instead of the first. They've been doing things throughout the retail season to cut costs and do everything they can to preserve jobs."

He said the company has endured economic hardships in the past.

In a week already marked by mill closures and hospital layoffs, Hicks said, Harry & David's news underscored the need for the chamber's lobbying efforts in Salem.

"It's clear," Hicks said. "Our employers — from smallest to the largest — need all the help they can get."

Harry & David has experienced declining sales in recent quarters. During fiscal 2008, ending late June, Harry & David earned $4.3 million on revenue of $545.1 million. The company lost $15.2 million in the first fiscal quarter; its second quarter results will be announced on Feb. 6.

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com.

Print this Article Email this Article