Yankee Candle Co. To Cut Staff

Yankee Candle Co., Whately, MA, announced its fourth-quarter earnings rose 22%, but still missed analysts’ estimates, as inclement weather and a slowdown in consumer spending dampened the company’s holiday sales season. The candle maker, wholesaler and retailer said it was laying off about 14% of its work force and closing a distribution facility because of overcapacity from the holiday season. Net income for the quarter rose to $27.7 million, or 51 cents a diluted share, from $22.7 million, or 42 cents a share, a year earlier. Wall Street analysts polled by research firm First Call/Thomson Financial expected 55 cents a share.

“Consolidated sales growth, retail sales growth and wholesale sales growth were consistent with the expectations,” Michael Parry, Yankee’s president and chief executive, said in a statement.

Growth was “restrained in the fourth quarter by negative weather conditions during the last week of the year and the general slowdown in consumer spending evidenced across most retail businesses,” Parry said.

Total sales for the quarter rose 27 percent to $141.4 million from $111.7 million a year earlier. Wholesale sales, including European operations, rose 15 percent to $53.4 million, while retail sales rose 35 percent $88.0 million. Sales at the 102 retail stores that have been open at least one year, as well as through its mail order hub, rose 9 percent. Retail same-store sales increased 5 percent in the quarter, the company said.

The company said it opened five new retail stores during the quarter and 45 for the full year, bringing its total stores operated to 147 in 35 states.

Yankee said it will close its Salt Lake City distribution center, cutting about 180 jobs, and will also cut about 275 staff positions at its Deerfield and Whately, MA, facilities. The layoffs are expected to be completed by the end of February. The company expects the measures to cut annualized costs by about $10 million. Yankee said it will take a $7 million pre-tax restructuring charge in the first quarter to implement the changes.

“These decisions were very painful, but necessary to readjust our business to best serve our customers and shareholders,” Mr. Parry said. “We are confident that the steps we are taking now position us for at least 25 percent EPS growth in 2001.”

Mr. Parry said the company, anticipating a strong holiday selling season, ramped up its logistics and manufacturing infrastructure. The moves created inefficiencies that reduced net income by about 3 cents a share due to excess labor and support costs added prior to the fourth quarter. He also said that higher logistics expenses reduced net income by about 2 cents per share, due primarily to excess capacity at the Utah facility and higher levels of overtime and direct labor costs at its East Coast logistics operations.