Zebra Laying Off Hundreds Of Employees, RaisingPrices Amid Slowdown

‘Late in the second quarter, we began to experience a more broad-based moderation of demand across many of our core product offerings,’ Zebra wrote in a regulatory filing.

Zebra Technologies will use a voluntary retirement plan as part of its move to shed more than 7 percent of its global employee base—appproximately 700 employees—due to a slowdown in demand for the vendor’s mobile computing products.

The Lincolnshire, Ill.-based vendor said in a regulatory filing that the voluntary retirement plan (VRP) will require participants “to retire in 2023 in exchange for cash severance and other benefits.” The VRP should cost Zebra about $45 million. The costs should “be substantially settled by the first quarter of 2024.”

The vendor explained in the filing that “late in the second quarter, we began to experience a more broad-based moderation of demand across many of our core product offerings.”

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Zebra Lets Employees Go

For its part, Zebra said it “has a track record of judiciously managing our operating expenses and investments with a long-term view. Our disciplined approach has enabled our long history of success, preparing us to succeed in challenging times. While we are currently facing a difficult and uncertain business environment, we believe these actions are needed to reprioritize and invest in parts of our business that will strengthen our business for the long run.”

The vendor has about 10,000 worldwide channel partners, according to CRN’s 2023 Channel Chiefs.

The Zebra regulatory filing further explained that demand declines were most pronounced in the mobile computing business of the Enterprise Visibility and Mobility segment.

Zebra blamed the decline on “fewer large order deployments as we believe large enterprises are absorbing significant capacity built out over recent years, while they are also experiencing tighter capital spending budgets,” according to the filing.

Along with the large order declines, distributors have reduced inventory levels and Zebra expects “these trends to continue through at least the remainder of 2023.”

The vendor will not only reduce head count but also increase list prices on certain offerings and get a better handle on operating costs, according to the filing.

Radio frequency identification (RFID) and mobile computing products supplier ScanTexas previously reported that Zebra list prices on select items increased May 1. The increases included:

*8 percent increase on ZD621 and ZD621R desktop printers

*5 percent increase on mobile computers, mobile computing software, rugged tablet hardware, general-purpose barcode scanners, kiosk scanners, industrial scanners, card printers, card aftermarket products, and VisibilityIQ Foresight (VIQF) services

*4 percent increase on certain tabletop and industrial printers, mobile printers, RFID printers and printer aftermarket products

*3 percent increase on ZD421 printers and certain wristband products

Still, some good news for Zebra is the continued recovery of its overall supply chain, with improvements in both component parts availability and costs of transportation. Zebra’s “ability to meet customer demand has improved as compared to the prior year,” according to the filing.

The vendor employed about 10,500 people across 120 facilities in 190 countries, according to Zebra’s 2022 annual report.

The employee reduction is deeper than initially expected. In July, Crain’s Chicago Business reported that Zebra would cut 2 percent to 3 percent of its jobs through layoffs and buyouts.

A Monday Crain’s article put the new total number of cut employees at about 700.

On Aug. 1, during Zebra’s most recent earnings call for the second fiscal quarter ended July 1 the vendor reported a 17 percent decrease year over year in net sales, down to $1.2 billion. Net income was $144 million.

Bill Burns, named Zebra’s CEO in March, told listeners on the earnings call that the vendor “expanded cost reduction initiatives” due to the “difficult demand environment.”

“While all end markets declined, demand was weakest in retail and e-commerce, in transportation and logistics as many customers are absorbing capacity they built out during the pandemic,” Burns said, according to a call transcript.

He continued: “Our distribution channel has been aggressively driving down inventory as end-user demand has slowed, product lead times have recovered and the cost of holding working capital has increased. Although global macro indicators have been resilient, the goods economy has underperformed the services economy.”

Zebra CFO Nathan Winters told listeners that the vendor expects sales this quarter to decline 30 percent to 35 percent year over year, according to the transcript.

Zebra joins a slate of other technology vendors that have conducted layoffs and cited lessened demand for digital tools since the height of the pandemic.

Vendors that have recently made or announced head-count cuts include SkyKick, Rapid7, Intel, Dell, Secureworks and Fortinet.