REI Co-op Reports Widening Loss, Sales Decline in 2023
REI Co-op on Tuesday announced broad financial results from 2023, including a widening loss and a dip in revenues.
In tandem with the release of its annual Impact Report, the outdoor retailer said it closed 2023 with $3.76 billion in net sales, which represented a 2.4 percent decrease from 2022. Net loss in 2023 was $311 million, which widened from a net loss of $164.71 million in 2022. The company said this loss was the combined result of investments in employee pay, member rewards and a $169 million non-cash valuation allowance, which REI said will be helpful when it returns to profitability.
The retailer also said that overall, it invested nearly $270 million back into its co-op community. The company said it invested $57 million in employee retirement and performance incentives and added 1.3 million new members in 2023.
In a letter to employees accompanying the results, REI president and chief executive officer Eric Artz said the 2023 financials were “a deeply disappointing result — for me and for our teams.” Looking ahead, Artz said 2024 will have a strong focus on regaining profitability.
In January, Artz said REI would lay off 357 people across its corporate offices and distribution centers amid what he described as an “increasingly challenging” state of REI’s business and the outdoor industry at large. At the time, Artz projected 2024 revenues to be down compared to 2023. He added that REI would not fund “merit increases” for headquarters employees in 2024 would not backfill open leadership roles. Earlier, in October, REI laid off 275 of its 12,300 store employees as it revamped its store operations system.
“We chose to make changes to our cost structure, including the difficult decision to make reductions to our workforce,” Artz said in the letter to employees. “Rather than chasing a quick profit, we chose to return to profitability over multiple years while staying true to our purpose and values. Reshaping the foundation takes time and we are doing so in an overall economic and retail environment that continues to prove highly volatile.”
In its 2023 Impact Report, REI also highlighted its climate achievements, such as getting its 2023 emissions down 10 percent compared to 2022. REI also said it diverted 86 percent of operational waste from landfills in line with a goal to become a Zero Waste organization by 2025. On the product side, REI said that 53 percent of sales came from products that have at least one sustainability attribute.
REI said it donated $6 million in 2023 to 74 local, regional and national nonprofits through its Cooperative Action Fund and launched its Outside in 5 initiative in 2023, which is focused on getting every person in America outside in five minutes or less.
Just last week, REI said it would exit its REI-branded footwear business after 2024, four years after the company revealed to FN that it would begin producing its own shoes. In the time since its initial launch, REI has delivered eco-friendly hiking boots, trail runners and more. Meanwhile, the company said it would double down on its fast growing running business.