REI CEO Eric Artz announced that the company is reducing its workforce by 357 people, including 200 working at headquarters, six in sales and customer experience, 3 in experiences, and 121 in distribution centers. This number represents 2.2 percent of REI’s total workforce, according to the Seattle Times. Non-HQ store-specific roles were not impacted.
“Decisions like these—with real impacts to people’s lives and livelihoods—are the most difficult that I must make as your CEO,” Artz said in a statement shared with impacted employees. “The coming days are going to be tough as we let go of a lot of good people. We’re going to do everything we can to support them, but that will not make this moment any easier. Each of you will have a lot to process, whether you are leaving the co-op or staying. Our priority today is to have the necessary conversations with colleagues we are saying goodbye to, and we will create more time in the coming days to discuss how we move forward.”
Artz continued to say that while this move was primarily driven by financial necessity, the company took a strategic approach to evaluating team structures against business needs to ensure consistency across the organization as leaders make decisions about which roles to eliminate. “While many decisions are based on work that no longer exists, we also focused on reducing duplicative work, layers, and hierarchy to build more efficient and connected teams,” Artz said.
According to Artz, every employee whose job was eliminated will receive separation benefits including severance, COBRA, and outplacement support and services.
In addition to the reduction in workforce, the company said that merit increases will not be funded for headquarters (including leaders) in 2024, though store teams and managers, DC teams and managers, S&CS teams and managers, and non-HQ experiences teams and managers will remain eligible. The company will also not backfill recent leadership departures, with the goal of reducing the size of the senior leadership team by 22 percent for 2024.
Explaining how the company got to this point, Artz said that outdoor specialty retail has experienced four quarters of decline, and that this trend is only worsening.
“While we were able to outperform this trend for much of the last year, it caught up with us in Q4 and we now expect conditions to remain very challenging throughout 2024,” Artz explained. “As a result, we are planning this year’s revenue to be down from 2023, reflecting the macroeconomic conditions we are expecting for 2024. When we plan our revenues down, we must adjust our plans and cost structure accordingly. We must also continue our work to return REI to profitability to set the co-op up for long-term health and success.
“The year ahead will require us to make strategic and intentional choices to control things that we can. Many of these choices will be difficult. And they are what we must do to ensure the co-op is healthy for the long-term.”