Retailer lays off 10% of staff after earnings plummet
The news just keeps getting worse for Hollywood Entertainment, especially for many of the staffers at the Portland, Ore.-based video retailer.Last Thursday, just hours after putting the best spin he could on third-quarter net earnings that were just 10% of earnings for comparable business in the same period last year, Hollywood chairman and CEO Mark Wattles laid off about 10% of his staff. Neither Wattles nor anyone at Hollywood returned calls Monday. Some of the people who might have previously returned those calls in the marketing and publicity department have been laid off, as have most of those in the store development and real estate development groups. No notice The total number of staffers dismissed without notice, and in some cases without severance pay, is believed to be about 50. Hollywood has roughly 500 employees. Those employees might have guessed their jobs were in jeopardy by the comments Wattles made in discussing the company’s earnings. He said Hollywood would focus on paying the company’s roughly $60 million debts before opening any more stores. He also said that advertising would be scaled back, noting Hollywood spent $7 million more in the third quarter than it did last year. The retailer is suffering from an industrywide malaise in the video rental market. However, Hollywood and the industry are expecting one of the strongest fourth quarters ever since the new VHS and DVD titles being released represent movies that have collectively generated more box office revenue than any previous quarterly release slate. Wattles, founder of Hollywood, took back day-to-day control of the company late last month after president Jeff Yapp agreed to leave when his three-year agreement expired in September (Daily Variety, Oct. 30). That decision came just a couple weeks after Wattles decided to release a warning about third-quarter earnings without telling Yapp. The bottom dropped out of Hollywood’s already sagging stock price in the 48 hours following that announcement, cutting the company’s stock value in half.