REI Layoffs and Experiences Division Closure: Impact and Future Strategy

REI store featuring camping and hiking gear prominently displayed.
REI prioritizes core outdoor gear after exiting its Experiences division.

REI Layoffs and Experiences Division Closure: Impact and Future Strategy

On January 8, 2025, REI Co-op announced a significant restructuring, including the layoff of 428 employees and the closure of its Experiences division, which encompassed adventure travel, outdoor classes, and day tours. This move aims to stabilize REI’s finances and refocus its efforts on core business areas, such as camping, hiking, and outdoor apparel, following years of financial challenges.

Impact of REI Layoffs

The layoffs affect 180 full-time employees and 248 part-time employees, including 67 positions in Washington state. Full-time employees will retain their salaries and benefits until March 9, 2025, while part-time staff will receive severance payments. For customers, refunds will be issued for any existing bookings, and REI is working to terminate contracts with its travel partners.

Why REI Closed Its Experiences Division

CEO Eric Artz highlighted that the Experiences division accounted for less than 0.4% of REI’s customer base in 2024, serving only 40,000 people. Despite its popularity among outdoor enthusiasts, the division was unprofitable and required subsidies from other parts of the business. After reporting a $311 million net loss in 2023, REI’s leadership decided to focus on profitable segments to achieve long-term financial sustainability.

REI’s Future Strategy

  1. Focus on Core Business
    REI plans to prioritize its main offerings, including camping, backpacking, running, and hiking gear. The company believes that reallocating resources to these areas will enhance profitability and better serve its primary customer base.
  2. Investment in Technology
    To improve inventory management and customer experience across its online and in-store platforms, REI will invest in technology. This includes streamlining operations and providing a seamless shopping experience.
  3. Community Engagement
    While discontinuing its Experiences division, REI is exploring new ways to deliver outdoor education and community-building programs. The company aims to maintain its commitment to fostering a love for the outdoors, albeit through financially viable initiatives.

Financial Outlook

Preliminary results for 2024 indicate that REI is nearing breakeven for pre-dividend operating income and free cash flow. These positive signs suggest the restructuring may help the company recover from recent losses while preparing for future growth, including new store openings and product expansions.

Challenges Ahead

REI faces stiff competition from brands like Cabela’s and Bass Pro Shops, which offer broader selections at competitive prices. Adapting to evolving consumer preferences will be key for REI’s recovery and sustained success.

For more details, read Fox13 Seattle’s report on REI layoffs.

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