Dive Brief:

• REI on Tuesday laid off 167 people at its corporate headquarters as part of a restructuring effort. That number makes up about 8% of REI’s headquarters staff and less than 1% of its total workforce, CEO Eric Artz said in a message to employees.
• The layoffs impact both leaders and employees, and are aimed at reorganizing the business around the company’s “areas of highest impact.” All eligible full-time employees will receive a severance package and payment for remaining vacation time. REI is also offering four months of COBRA healthcare coverage and outplacement support.
• “It is vital that we get the co-op back to profitability as quickly as possible,” Artz said in the communication. “I know we can get there, but it will require each of us to work very differently.”

Dive Insight:

REI is not immune to the challenges hitting the retail industry, and restructuring its corporate headquarters is a necessary step if the retailer wishes to realize its ambitions, Artz said.

“We have clear goals for the future of the co-op and are confident in our long-term strategies,” Artz said. “But in the face of increasing uncertainty, we need to sharpen our focus on the most critical investments and areas of work to best serve our members and grow the co-op over the long term.”

In 2023, Artz noted, REI will emphasize “a few vital strategic priorities,” which include an increased focus on the customer experience. Also among those top priorities is returning to profitability. In 2021, REI reported net income of $97.7 million and sales growth of 36%, but the retailer has not yet reported financial results for 2022. 

As REI restructures its headquarters, the company is combining several headquarters divisions in addition to reducing its overall size. 

“This news has a very real impact on people we care deeply about, and this period will be difficult,” Artz said. “We will do everything we can to take care of departing employees through this transition.”

REI spent 2022 building out its leadership team. The retailer hired its first chief supply chain officer in May, and brought on a Target veteran as its vice president of stores and retail operations in October. A vice president of financial planning and analysis joined the retailer in November.

REI’s employees at two stores also voted to unionize in 2022, with a New York location unionizing in March and a store in Berkeley, California, opting to join them in August.