Japan's Panasonic to cut 15,000 jobs, shut plants and Macy's to cut 7000 more jobs

[Mrs. Sharon B. Hodge]

Japan's Panasonic to cut 15,000 jobs, shut plants
by Yuri Kageyamma


TOKYO – Panasonic Corp. said Wednesday it will slash 15,000 jobs and shut down 27 plants worldwide to cope with plunging demand for its TVs, semiconductors and other electronics products.

The world's largest maker of plasma display TVs also announced a net loss for the October-December quarter and lowered its forecast for the fiscal year through March to a net loss of 380 billion yen ($4.2 billion), its first annual loss in six years.
Panasonic joins a slew of other major Japanese companies, including Sony Corp. and Toshiba Corp., in announcing job cuts and forecasting a full-year loss as the global slowdown batters the world's second-largest economy.

The Osaka-based manufacturer plans to cut the jobs — half of which will come in Japan — by the end of March 2010. They amount to about 5 percent of its 300,000-strong global work force.

Panasonic also will shutter 14 overseas plants and 13 plants in Japan by the end of March to adjust production and cut costs, company spokesman Akira Kadota said.

Panasonic blamed the dismal earnings results on the global slowdown set off by the U.S. financial crisis, the rapid surge of the yen and sudden price drops. Sales slid in a wide range of products, including flat-panel TVs, DVD recorders, microwaves, lamps and semiconductors, it said.

"The company's business conditions have worsened particularly since last October, due mainly to the rapid appreciation of the yen, sluggish consumer spending worldwide and ever intensified price competition," it said in a statement.

Panasonic reported a 63.1 billion yen ($709 million) loss for the fiscal third quarter, down from a 115.2 billion yen profit the same quarter the previous year.


Quarterly sales dropped 20 percent to 1.880 trillion yen from 2.345 trillion, with overseas sales decreasing 29 percent, and Japanese sales down 10 percent.

The last time Panasonic reported an annual loss was for the fiscal year ended March 2002, when a global electronics slump and massive restructuring costs contributed to 431 billion yen in red ink.

Since then, the company has been shedding money-losing businesses and focusing on key products such as plasma display TVs to turn itself around.

The company, formerly named Matsushita Electric Industrial Co., for its founder, also lowered its sales forecast for the fiscal year ending March 31, to 7.75 trillion yen from an earlier 8.5 trillion yen.

Panasonic will delay by a half year starting production at two Japan plants — one for plasma panel TVs to July 2010, and another for liquid crystal display TVs until January 2010, in response to slipping demand for flat-panel TVs, it said.

The latest restructuring measures will cost an additional 190 billion yen on top of the 155 billion yen Panasonic has already announced for the fiscal year through March.

Rival Japanese manufacturer Sony is forecasting a 150 billion yen net loss for the fiscal year through March. The last and only time Sony reported a loss — the fiscal year ending March 1995 — the red ink came from one-time losses in its movie division, marred by box office flops and lax cost controls.

Hitachi Ltd., NEC Corp. and Toshiba are also all forecasting big losses for the fiscal year.

Panasonic shares rose 1 percent to 1,092 yen. Earnings were announced after trading ended.


Macy's to cut 7,000 jobs, slash dividend
By ANNE D'INNOCENZIO,


NEW YORK – Macy's Inc. announced Monday that it will eliminate 7,000 jobs, almost 4 percent of its work force, and cut capital spending, reduce its contributions to its employees' retirement funds and slash its dividend to preserve cash amid a severe pullback in consumer spending.

The Cincinnati-based department store chain also announced the national rollout of a plan to localize merchandising to specific markets, which it began in some regions last year.

The company, which also delivered downbeat earnings and sales forecasts for the year on Monday, said it plans to integrate all its geographic divisions into a single unit.

Macy's shares fell 4 percent Monday to close at $8.59.

Macy's said the job cuts, which include some unfilled positions and 1,900 being eliminated in the restructuring, will come at corporate offices, stores and other locations. The company employs about 180,000 people.

Macy's announced last month — on the heels of the worst holiday shopping season in decades — that it would close 11 stores, affecting 960 employees. The company expects the additional actions announced Monday to lower its annual selling, general and administrative expenses about $400 million per year starting in 2010.

The company also slashed its quarterly dividend to 5 cents from 13.25 cents. The dividend will be paid on April 1 to shareholders of record March 13.

"We just believe that this is a time when nothing should be considered a sacred cow," Macy's Chief Executive Terry J. Lundgren said in a conference call with analysts on Monday after the announcement.

The news from Macy's came as the government released yet another batch of bad news on consumers' financial health: Consumer spending fell for a record sixth straight month in December as financially strapped households, worried about rising layoffs, increased their savings rates to the highest level since May, federal officials said Monday.

Department stores have been especially hard-hit by the poor economy as shoppers cut spending and turn to discount stores. Last month, Fresno, Calif.-based department store chain Gottschalks Inc. put itself up for sale and said it had filed to reorganize in a Chapter 11 bankruptcy. Dallas-based Neiman Marcus Group Inc. said this month that it was cutting about 375 jobs, or 3 percent of its work force.

Macy's began testing the localization strategy in 20 regional markets last spring and expects the reorganization to be complete beginning in the second quarter this year.

Lundgren said the strategy has worked well so far, pointing to the fact that 13 of Macy's 15 top-performing geographic markets in December were part of the pilot program.

The idea is to concentrate Macy's top talent in local markets and better stay on top of trends by grouping Macy's stores nationwide into 69 geographic districts of 10 to 12 stores each. Twenty of the districts — in the Midwest, Upper Midwest and Pacific Northwest — were created as pilots in spring 2008 and will remain in place.

In a phone interview with The Associated Press on Monday, CEO Lundgren acknowledged that he would have preferred to take more time with the national rollout. But, given the weak economy, he said, "You have to take action now."

Lundgren said he is looking at the company as a "clean slate" and is "starting from scratch" as he spearheads the overhaul. He also said he hopes Macy's will improve on inventory turns as a result of the restructuring.

He declined to comment on how much inventory will be down this year but said that, given the localization effort, the merchandising team will be better able to eliminate duplications in a given merchandise category in a given market.

Also as part of the restructuring, Macy's central buying, planning and senior management and marketing functions will be located primarily in New York.
Corporate-related businesses functions such as finance, human resources, legal, property development and company purchases will be located primarily in Cincinnati.
The localization began last year as the company struggled with disappointing sales in some markets where the Macy's name replaced a local favorite as the company absorbed May Department Stores Co. in 2005.

Macy's moves received kudos from Wall Street analysts.
"The environment is giving (Macy's) the opportunity to streamline its infrastructure," wrote Liz Dunn, an analyst at Thomas Weisel Partners LLC in a note released Monday. "We believe that (Macy's) regional buying strategy has been an impediment to profitability."

Also to reduce expenses, Macy's is eliminating merit salary increases for executives in spring 2009 for performance in 2008, and it will cut its contributions to employees' retirement accounts this year.

Assuming the economy will remain challenging for the year, the company is reducing this year's capital budget to $450 million, or $100 million to $150 million less than the $550 million to $600 million previously announced and well below the original $1
billion budgeted.

Macy's said it expects to earn between 40 cents and 55 cents, excluding one-time costs, for the year that ends next January.

Analysts surveyed by Thomson Reuters project earnings of 87 cents per share.

The company predicts its same-stores sales or sales at stores opened at least a year will fall between 6 percent and 8 percent in the year that ends in January 2010. Same-store sales are considered a key indicator of a retailer's health.

The company reports its fourth-quarter earnings results on Feb. 24.