January 9, 2008 in Idaho

Coldwater lays off workers at HQ

By The Spokesman-Review
 

Coldwater Creek Inc. laid off 51 people at its corporate headquarters in Sandpoint on Tuesday, following a rocky year in the women’s apparel industry that sent the company’s stock price tumbling by nearly 80 percent.

A total of 65 positions were eliminated companywide, including jobs in Coeur d’Alene, Seattle and New York. The cuts will save Coldwater Creek approximately $6 million.

“Fifty-one families are going to be devastated. There’s no other way around it,” said Gretchen Hellar, Sandpoint’s mayor-elect, who received a courtesy call late Tuesday afternoon from Dan Griesemer, Coldwater Creek’s chief executive officer.

However, “when a company’s role is to make a profit, you have to find ways to bring that profitability back,” Hellar said.

Coldwater Creek reported a net loss of $6.2 million during its fiscal third quarter, which ended Nov. 3. Sales of sweaters and jackets – typically best-sellers for the company during fall – were poor. Customers bought woven shirts and lighter, lower-priced garments instead, company officials said at the time.

The firm was one of many clothing companies hampered by slow sales moving into the all-important holiday season.

Analysts said jittery consumers chose to hang on to their money amid higher gasoline costs, fears of a weakening economy and rising rates of home foreclosures.

The “Missy” market for women 40 and older has been hit particularly hard. Talbots, a Coldwater Creek competitor, announced last week that it would close 78 children’s and men’s clothing stores to concentrate on its core female customer. The stock at Chico’s FAS, another competitor, has lost about 70 percent of it value in the past year.

In a brief phone interview, Griesemer said employees at Coldwater Creek’s 300-plus retail stores will not be affected by Tuesday’s layoff announcement. Neither will the company’s distribution center in Parkersburg, W.Va., or its call centers, he said.

Coldwater Creek, which had sales of more than $1 billion during the 2006 fiscal year, employs about 10,000 full- and part-time workers. Approximately 600 of them work in Sandpoint.

Griesemer made vague remarks Tuesday about a new strategic direction for the company but declined to elaborate.

He referred to the “challenging climate” for the women’s clothing industry, but said “who we are as a company, a brand, is not changing.”

Homegrown Coldwater Creek began as a small catalog retailer in 1984. Over the past six years, the company grew its sales rapidly through the aggressive opening of retail stores.

Coldwater Creek’s financial setbacks have already affected plans for a University of Idaho campus in Sandpoint. The Wild Rose Foundation, a philanthropic organization run by company co-founder Dennis Pence, planned to spend at least $36 million to build the campus on 77 acres owned by UI.

Those plans were shelved indefinitely in October. Coldwater Creek stock made up a substantial portion of the foundation’s portfolio, whose net value dropped when the company’s stock price skidded.

Coldwater Creek’s stock price took another hit Tuesday, dropping nearly 10 percent to trade at $5.74 a share.

Hellar said the community’s growing economic diversity will soften the impact of Coldwater Creek’s layoffs. Bonner County’s unemployment rate averaged 3.3 percent last year.

“Dan Griesemer assured me that this is not the first of many cuts, and that Coldwater Creek is committed to the local area,” Hellar added. “I took him at his word.”


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