U.S.

Sears, Kodak Announce Major Job Cuts

By CBSNews.com staff CBSNews.com staff

October 24, 2001 / 11:24 AM EDT / CBS

Sears, Roebuck and Co. said Wednesday it is eliminating 4,900 salaried jobs over the next 18 months and revising its merchandise offerings as part of a cost-cutting overhaul.

The announcement came as Sears reported a 6 percent decline in third-quarter earnings — slightly better than expected — and outlined a new strategy that moves the retailer further from a traditional department-store company and closer to that of a discount store.

In a separate announcement, Eastman Kodak Co. said it was cutting between 3,500 and 4,000 more jobs, or up to 5.1 percent of its work force, as the world's biggest photography company struggles to rebound from a yearlong slump in film sales it blamed largely on a lagging economy.

Kodak, which already targeted 3,500 jobs in April, announced the new job cutting plans as it reported that third-quarter profits sank 77 percent to $96 million, or 33 cents a share, down from $418 million, or $1.36 a share, last year.

Sears, the nation's fourth-largest retailer, has been losing ground in recent years to such discounters as Kohl's and Target.

As part of the changes, Sears is making its biggest job cuts in eight years, trimming about 22 percent of its salaried corporate and regional staff. No reductions in store staffing were announced.

Some 1,300 positions will be eliminated at Sears' headquarters in the Chicago suburb of Hoffman Estates by the end of 2002. That will result in a cut of nearly 19 percent of Sears' 7,000 headquarters employees.

Another 3,600 positions will be cut from Sears' field organization for its full-line department stores. The field organization, which employs 15,000, consists of district and regional offices around the nation that supervise the retailer's 860 department stores.

The new three-year plan reflects a slightly different direction for the company under chairman and chief executive Alan Lacy, who took over a year ago from longtime Sears head Arthur Martinez.

"Our new approach to merchandising reflects a distinctive competitive positioning, a clear emphasis on home and family and a lower-cost operating model," said Lacy, who was meeting with retail analysts in Chicago on Wednesday to discuss the changes.

The new strategy, he said, "will substantially improve Sears' financial performance by creating an easier shopping experience for our customers while operating with greater focus, speed and efficiency."

Instead of abandoning Sears' long-struggling apparel business, which Lacy acknowledged earlier this year he had considered, the company will put an even stronger focus on it. Merchandise will be upgraded, the depth of its assortments will be improved and the company will establish a Sears casual brand for its men's, women's and children's clothing.

Sears also is eliminating "less productive" promotional activity, allowing it to invest more heavily in marketing the Sears brand.

Customer service changes include more service for major puchases and more self-service in areas where customers generally need less assistance. Centralized checkouts will be installed in about 140 stores by year's end and in all stores by mid-2002. Store signs, fixtures and layouts also will be revised.