In a letter to REI employees and past REI Experiences customers, REI President and CEO Eric Artz stated, "After a thorough review and careful consideration, I have made the difficult decision to exit the Experiences business altogether, effective this week." This highlights the decisive move by REI to streamline operations and focus on core areas amid financial difficulties.
Artz explained, "While we are still in the process of finalizing 2024 results, our preliminary financials indicate we will be close to breakeven for both Pre-Dividend Operating Income (PDOI) and Free Cash Flow (FCF)." This statement reflects the financial pressures REI is facing, pushing for a more sustainable business model.
Artz further elaborates on the financial rationale, stating, "Experiences served 40,000 customers in 2024 - less than 0.4% of all co-op customers - and costs significantly more to run than it brings in." This underscores the non-viability of the Experiences division from a cost-benefit perspective.
The REI President noted, "Even at our pre-pandemic level of revenue, we would still be losing millions of dollars every year and subsidizing Experiences with profits from other parts of the business." This explanation emphasizes the need for the company to reallocate resources to more profitable ventures.
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