Real Goods in $1 million cost-cutting quest

For its fiscal year ended March 31, renewable energy products cataloger/retailer Real Goods Trading Corp. posted a net loss of nearly $1.3 million on sales of $19.0 million. Then, for the quarter ended June 24, net sales were $3.2 million, down 29% from $4.1 million the previous year, and the Santa Rosa, CA-based company took a $520,000 loss.

And so, Real Goods decided the time had come to make some changes – $1 million worth. As part of an effort to save that much money during the coming year, the company opted to outsource its e-commerce responsibilities, test less expensive catalog and parcel shipping methods, and most notably, accept the voluntary resignation of president Mark Swedlund and chief financial officer/corporate secretary Les Seely.

“Mark and I had been talking about this for the past several months after determining that our infrastructure is oversized for our level of sales,” says Real Goods founder/CEO John Schaeffer, who has reassumed the title of president. “We looked at what we could do to get expenses down, and Mark and Les offered to resign.” Controller Jeff Pecsar was promoted to vice president of finance and accounting.

Beyond the executive suite Real Goods also shifted its three-person e-commerce staff from full-time employment to freelance. “We decided that they would better serve us as an outside consulting team, which will save us six figures,” Schaeffer says. “This will allow us to have a contract with them and still avoid having any glitches in service.”

To further cut costs, Real Goods plans to experiment with batch-mailing catalog requests via Standard A mail, as opposed to sending all catalog requests individually via First Class. The plan could reduce costs from $1.50 a book to $0.30 a book, Schaeffer says.

The company also plans to shift about 40% of its package shipments from United Parcel Service ground delivery to the Airborne At Home drop-ship delivery service, which Airborne Express runs in conjunction with the U.S. Postal Service, to reduce costs.

Despite the big changes, Schaeffer insists the company is in good standing: “We have more than $1 million in the bank and haven’t touched our $1.5 million line of credit as we enter our strongest season of the year.” And with gas prices increasing, Schaeffer adds, “we see huge opportunities emerging for solar and renewable energy.”

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