Powell's Lays Off 31 staff

Citing the "Unprecedented, Rapidly Changing Nature" of the Book Industry -
PublishersLunch

On Tuesday Powell's Books (pic Paul Lowry) laid off 31 staffers, or approximately 7 percent of its unionized work force, at its stores in Burnside and Beaverton and two industrial warehouses, a move they cite as a response to the "unprecedented, rapidly changing nature of the book industry." In a statement Powell's cited "changing consumer behavior" - namely, the rise in e-book sales - as causing a significant impact over the past three years, along with "an industry-wide decline in new book sales, rising healthcare costs, and the economy."

President Emily Powell stated "I feel it is critical to make some very difficult adjustments at this time, to address our current reality and to prepare the company for success in the future, a future that looks very different than our business today."
Those remarks echo what her father Michael Powell said last summer when turning over executive responsibility in addressing the rise of ebooks and online book sales: "It's certainly shaking up the industry, and retailers aren't sure what their role is. It's an industry with an enormous amount of flexibility, and I hope with a little help from me, Emily is going to have to make some changes to help Powell's compete and survive."

The announcement notes that Michael Powell "has been involved in the changes" and he adds, "Emily's transition to leadership of the business happened at a precarious time, at a crossroads in our business. I'm confident her fresh ideas and her understanding of technology will steer the company successfully forward."

A letter to staffers was more pointed about the independent retailer's current and prospective financial difficulties, saying "sales for this fiscal year are down," with the largest decreases in new book sales. (In 2008, Hoover's had estimated Powell's annual sales at $64.8 million.) "We see this as a clear indication that we are losing sales to electronic books and reading devices. Given the company's declining sales, combined with industry data on the rapid growth of electronic book sales, we expect to see continuing erosion of new book sales over the next few years."

In addition, Powell's has instituted a pay freeze for non-bargaining employees as of July 1st, and will also freeze company 401k contributions starting February 21st.

Portland Mercury