UPDATE 1-Gymboree cuts senior staff salaries; warns of weak '09
Dec 15 (Reuters) - Children's clothing retailer Gymboree Corp GYMB.O said it will cut salaries of its senior management staff by 10 percent to 15 percent, effective immediately, and warned 2009 earnings might be below 2008 levels despite the cost-cutting efforts, sending its shares down more than 11 percent.
The company, which operates Janie and Jack stores as well as its namesake Gymboree chain, will also implement broad-based salary cuts of up to 10 percent for its senior field management and corporate staff, effective Jan. 4, 2009.
"While the financial position of the company remains strong with over $100 million in cash and no debt, the salary reductions we are implementing are just a piece of a broader strategy to be prepared for next year," Chief Executive Matthew McCauley said.
The company, whose rivals include Talbots Inc TLB.N, Children's Place (PLCE.O: Quotazione) and Gap Inc (GPS.N: Quotazione), warned although current sales trends were in the range of its prior outlook, there was "clearly weakness in the consumer sector" and it expects further deterioration in the consumer markets.
Many apparel retailers have been hurt by lower sales at their outlets as U.S. consumers, squeezed by the worst economic crisis since the Great Depression, tighten their purse-strings and curtail their appetite for non-essentials.
Shares of the company fell to a low of $20.96 but pared some losses to trade down $1.82 at $21.85 Monday afternoon on Nasdaq. (Reporting by Dhanya Skariachan in Bangalore; Editing by Deepak Kannan)
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