restructuring and resizing: November 2008 Archives

Parcel delivery service DHL announced on Monday it is ending its domestic shipping business due to U.S. market conditions. The company, a division of Deutsche Post, is refocusing on international shipping, five years after purchasing competitor Airborne to increase its American footprint.

As much as this decision was influenced by current market conditions, it also underscores an old Jack Welch principle: if a business does not occupy the No. 1 or 2 position in the market, the business may not be viable. DHL (and Airborne) were distant competitors to FedEx and UPS.

Furniture maker La-Z-Boy is closing 15 to 20 stores, laying off employees and cutting back spending in "response to slumping sales." Store closings will occur between now and March. The company has no concerns about its long-term financial health.

Major pharmacy chains are making major moves as the economy shifts.

Walgreen is undergoing a substantial restructuring in order to trim costs. The Wall Street Journal reported last week plans for the chain to overhaul much of its business--suppliers, jobs, stores and pharmacies--to improve performance. Among other initiatives, it hopes to centralize prescription processing to aid its pharmacists and reduce expenses.

Meanwhile, CVS is launching its upscale beauty store concept, called Beauty 360, in Washington DC this week. The store-within-a-store includes premium and niche beauty brands and personal services like manicures and facials. Beauty 360, which was announced in August, probably began its planning in 2007 or 2006, long before the credit crisis. The retailer is committed to the concept and is looking to open as many as 50 pilot stores with the upscale merchandise.