Closing time for Discovery Stores
1,000 jobs to be cut; company will focus on e-commerceDiscovery Communications said Thursday that it will close its 103 stand-alone and mall-based retail stores, cutting 1,000 jobs, or 25% of the company's global work force, in the process.
The move is the latest cost- cutting measure from new president and CEO David Zaslav, who eliminated 200 jobs at Discovery Communications in April and replaced a handful of senior executives in February, a month after he joined the company.
Zaslav has been leading a companywide strategic review aimed at eliminating underperforming divisions while shoring up those that have the most growth potential. The Discovery Stores lose about $30 million a year, a company executive said.
Discovery said that to sell its products going forward, it will continue to develop partnerships with large retailers and work on strengthening its successful e-commerce activities. The company said its e-commerce operations posted record sales and growth in 2006 and are up 144% year-to-date. It said DiscoveryStore.com has more than 12 million unique visitors annually and also reaches consumers through partnerships with Amazon.com and eBay.
"By eliminating our owned-and-operated, brick-and-mortar storefronts, which are cost-intensive and complicated businesses, Discovery can focus its efforts on high-growth e-commerce and licensing operations," Zaslav said.
"While retail is historically not the core competency of global media companies, there is strong consumer demand for Discovery's branded product lines. The company's e-commerce operations posted record growth and sales for 2006, and to realize the full value of our quality content, Discovery must also sell through large retailers who have more stores and provide more exposure to a greater number of consumers," he said.
Discovery said the closure of its stores will be completed by the end of the third quarter. It will retain Gordon Brothers Group, an advisory, restructuring and investment firm, to facilitate the liquidation.