CHARLOTTE, N.C. — A little less than a month after recording a loss of $770,000 in the first quarter of fiscal 2010, Lance Inc. on June 4 said it will undertake a series of cost reductions, including a reorganization that took place this week that resulted in a 2% reduction in its workforce.
Lance said the actions are being taken to restore profit margins and align the company’s operating costs with its revenue, which has been below the company’s expectations. When first-quarter results were announced on May 5 Lance said its revenues totaled $221,617,000, up 3% from the same period a year earlier but “well below expectations.”
“Our reduction in costs is necessary considering the impact that the current business climate has had on our revenue,” said David V. Singer, president and chief executive officer. “The reduction in our workforce is by far the most difficult part of our cost reduction action. Lance is a company that is driven by people and innovation, but with the current economic environment and resulting impact to our top line, adjustments are required to align operating expenses with sale volumes. These actions will not impede our work on positioning ourselves for growth, great service and innovation to continue to drive our top-line growth going forward.”
Lance said it does not have any further workforce reductions planned beyond those that occurred this week.
The company expects to record a pre-tax charge for severance and related expenses of approximately $3 million in the second quarter of fiscal 2010 in connection with these actions, and annualized benefits from the cost reductions are expected to total approximately $6 million.
Despite the moves, Lance said it is not changing full-year financial estimates, including revenue estimate for the full year 2010 in a range of $930 million to $950 million and its earnings per diluted share in a range of $1.10 to $1.25, excluding special items.