L.L. Bean Profits Rebound
Freeport, Maine — L.L. Bean’s profits returned to pre-recession levels and the company’s performance earned workers a healthy bonus approved Friday, but the retailer would have seen stronger performance if the president and Congress would reach an agreement on the federal budget, the company’s CEO said.
The privately held company said its revenue grew only half of a percentage point, but profits showed greater growth thanks to productivity gains.
The profit increase was enough to warrant a bonus of 7.5 percent of annual wages, which was approved at Friday’s board meeting.
CEO Chris McCormick called the company’s performance “outstanding” despite an anemic economy, but said it could have been even better with some help from Congress.
Consumer confidence, which grew in February, remains weak compared to pre-recession levels and will continue to bump along, he said, until Congress and the president provide some reason for optimism instead of bickering over the budget, automatic spending cuts and the debt ceiling.
“I’m looking to Congress to help the economy,” McCormick said. “What I’m hearing is that everything that’s being debated is doing just the opposite.”
The outdoors retailer, which celebrated its 100th anniversary last year, provided the good news about bonuses in a companywide memo that went out to 5,000 full- and part-time workers. For a worker making $30,000, the bonus would amount to $2,250 to be paid on March 15.
L.L. Bean enjoyed sales growth for the third consecutive year but the increase was fairly small: $1.52 billion in revenue compared to $1.51 billion the year before.
The company’s efforts to increase productivity, however, helped to boost profits, which the privately held company doesn’t disclose. Also, the company didn’t have to slash prices as much as other retailers to reduce excess inventory, and online traffic continued to grow, with a third of those orders coming from mobile devices, McCormick said.
The Maine-based outdoors retailer generally keeps a low profile, but McCormick, in an interview, joined other CEOs in voicing his frustration with Congress.
“Every time our business started picking up in the last few years then we’d have a debate in the headlines about the financial cliff or sequestration,” he said, referring to the automatic budget cuts.
“It knocks us down again. It just makes running a business more difficult.”
The company’s board on Friday also agreed to retain a defined-benefit pension plan for employees and to pump $35 million into the pension plan.
The pension spending underscores the family’s commitment to employees at a time when many retailers are scaling back pensions or eliminating them altogether, McCormick said. It also provides a competitive advantage when it comes to finding good workers, he added.