QVC, whose home-shopping sales have been hit by the dismal economy, Wednesday started layoffs that will ultimately result in the net reduction of 700 jobs, or nearly 6% of its U.S. workforce. Those cuts will result in savings of $30 million to $40 million next year, QVC said.
To kick off its belt-tightening, the electronic retailer, owned by Liberty Media, said Wednesday that it had laid off 160 employees from its U.S. locations, to simplify management and streamline, offering them “an enhanced” severance package.
“We remain committed to managing our company for the long term as we navigate this unprecedented economic crisis,” QVC CEO Mike George said in a prepared statement. “To ensure we’re operating as efficiently as possible, we made difficult decisions to lower our operating costs while taking several steps to invest in our future and better serve our customers.”
In the third quarter QVC’s domestic revenue fell 9%, to $1.1 billion.
The home-shopping network will also be changing its distribution structure by taking several actions:
-- Phasing out most functions of its West Chester, Pa., distribution center over the next 14 months, other than jewelry returns processing;
-- Converting its Florence, S.C., distribution center into a state-of-the-art facility for distributing its apparel, accessories and jewelry products;
-- Shifting the majority of its home product lines to its Rocky Mount, N.C., and Suffolk, Va., distribution centers;
-- Refocusing its Lancaster, Pa., distribution center on its health and beauty product lines while also serving as a centralized returns center for apparel, accessories, health and beauty.
As a result of these changes, about 500 positions in QVC’s West Chester, Pa., distribution center will be eliminated over time, and the company said it intends to create about 200 positions at its Florence, S.C., hub.
In addition, QVC said it will be shifting the volume to its other distribution centers, which will provide the opportunity for additional work hours for team members.
QVC will be making changes to its customer service over the next year, including closing its West Chester call center next March, resulting in the elimination of about 250 jobs. All functions of this center will be redeployed to the company’s San Antonio, Texas; Chesapeake, Va.; and Port St. Lucie, Fla., call centers, which will provide the opportunity for additional work hours for team members.
The company will also be expanding its successful home representative program, which enables team members to work some shifts at home and some shifts in its call centers. QVC expects to have more than 300 representatives in this program by the end of next year.
In total, QVC said its cost-cutting moves will result in the elimination of about 900 positions over the next 14 months, offset by the creation of about 200 new positions, for a net reduction of about 700 positions, or 5.8% of QVC’s U.S. workforce. These job reductions and other cost-cutting initiatives will result in a $30 million to $40 million reduction in 2009 forecasted operating costs.
“I had hoped we could avoid layoffs as we pursued our long-term growth strategies, but after witnessing the continuing deterioration in the economy, I came to the reluctant conclusion that this was not going to be possible,” George said.
“While we did our best to minimize the number of job reductions today, we lost many valued team members who were instrumental in building our business,” he said. “We have offered them enhanced severance packages and outplacement services to help with the transition. At the same time, we continue to make investments in the technologies, programs, processes and people necessary to move us forward to becoming the preeminent lifestyle retailer in this new multimedia world.”