On Weak Sales, Insignia Cuts 29% of Workers
Following a substantial drop in revenue, Brooklyn Park-based Insignia Systems, Inc., cut 34 workers, or about 29 percent of its work force as part of a restructuring effort.
The in-store marketing company said Monday that it also reduced the pay of its sales force and some managers-including CEO Scott Drill. His base salary will drop 50 percent from $316,200 to $158,100, effective March 31, according to a filing with the U.S. Securities and Exchange Commission (SEC).
The cost-cutting measures, which are expected to save $3.1 million annually, are in response to significant sales declines last year.
For the fourth quarter, Insignia reported a net loss of $388,000 and net sales of $4.2 million-down 42 percent from the same period in 2010. For the full 2011, net sales dropped 43 percent to $17.3 million; meanwhile, net income totaled $51 million, compared with $6.6 million the prior year, but the 2011 figure includes a gain from a settlement related to a lawsuit that Insignia filed against Connecticut-based News America Marketing In-Store, LLC.
“The restructuring and cost-cutting moves were made to protect shareholder value given the state of our current business,” Drill said in a statement. “The decision to reduce our work force was an extremely difficult decision for us to make, but one that we believe was necessary. We are hopeful that these moves will allow us to return to profitability at lower revenue levels.”
In addition to announcing the cuts, Insignia said that it promoted Vice President of Corporate Development Glen Dall, who joined the company in 2009, to the position of executive vice president and chief operating officer-a transition that took effect March 1.
Insignia develops and markets in-store advertising products, programs, and services to retailers and consumer goods manufacturers. It serves more than 13,000 chain retail supermarkets, 1,800 mass merchants, and 6,000 dollar stores-and it's among Minnesota's 100 largest public companies based on revenue.