Former NJ Firm Checkpoint Restructures, Cuts Jobs
Checkpoint Systems Inc.—the publicly traded Philadelphia maker of radio-frequency identification tags and other security equipment—has fallen on hard times and will cut about 1,000 jobs, including those of senior executives. Until November of last year the company was headquartered in Thorofare, N.J, in Gloucester County. Checkpoint’s poor performance may foreshadow problems other U.S. companies selling to the European retail sector could be experiencing and cannot be good news for our economy overall.
Rob van der Merwe, chairman, president and CEO, said, “Commencing in the third quarter we started to experience significant changes in retailer behavior most notably in Europe. In some cases, large retailers abruptly stopped their automatic ordering processes from their suppliers and in other cases, held back on placing orders pending the reduction in new material input costs, such as cotton.”
“The ongoing global economic uncertainty combined with unpredictable retailer behavior has convinced us that a conservative view of the market is required and that the Company needs to be immediately restructured to meet that view,” van der Merwe said.
The firm had already begun a restructuring program that was scheduled to eliminate 200 jobs. Checkpoint will close four production facilities and shift eight countries to an indirect sales model. It will continue its plan to consolidate back-office and administrative functions as originally discussed.
The company has reduced its profit guidelines and said it expects its annual adjusted earnings to total to between 32 and 43 cents, below analysts’ expectations of as high as $1.10. Annual projected revenue is only $860 million to $880 million, far less than the analyst-predicted $910.2 million, according to Bloomberg.
Checkpoint rebuffed an attempt in August by the New York-based hedge fund MMI Investments L.P. to force a sale of the company, choosing after a review to remain independent. MMI had contended that the company was severely undervalued. The hedge fund owns about a 4.9 percent stake in the firm.