NASHVILLE (BP) — In response to a sudden and steep decline in revenue and amid uncertainty over the near future, LifeWay Christian Resources announced plans for budget cuts of $25-30 million — approximately 10 percent of its budget — including spending freezes and staff layoffs.
LifeWay CEO Ben Mandrell said the cuts were necessary because of the onset of an economic crisis prompted by the COVID-19 pandemic.
“We hope these proactive steps will allow LifeWay to continue ministering to churches throughout the crisis, however long it lasts, and long into the future,” Mandrell said. “We know the COVID-19 crisis has created a unique challenge for churches as they find new ways to gather, and many are also facing severe financial strains. We want to make sure LifeWay is in a position to continue serving churches and church leaders to help them fuel their ministries.
“These are challenging times, but I am confident the Lord will use this for His glory and will push LifeWay into the future in a fresh way.”
LifeWay was unable to provide current employee headcount numbers or the number of employees affected by the layoffs when requested by Baptist Press.
In total, the budget cuts would range from 8.9-10.7 percent of LifeWay’s 2019-20 budget of $281.3 million. In addition to staff reductions, LifeWay plans to freeze hiring and discretionary spending, to suspend salary increases and matching 401K contributions for all employees. Additionally, members of the executive leadership team will give up one month’s salary beginning in May.
All of the temporary expense reductions are scheduled to go into effect Friday (May 1).
The cuts come after five consecutive weeks of steep revenue decline across all sales channels — a trend that is expected to continue. Revenue across key channels is down 24 percent compared to the year prior.
While book and Bible sales continue to see strong growth through LifeWay channels, the decline in revenue is largely due to a sharp drop in bulk orders from churches for resources like ongoing Sunday School curriculum, Bible study materials and VBS.
“Churches and church leaders are enduring a season of heartbreak and pain,” Mandrell said. “Since our mission is tied so closely to local churches, we expect the impact of COVID-19 to continue to be felt here at LifeWay as churches slowly and cautiously begin to reopen their facilities and gather in person.”
Mandrell also noted the continued uncertainty over whether LifeWay would be able to host camps and other events this summer, saying LifeWay could lose “tens of millions of dollars” from those, as well as sales of VBS and other summer curriculum.
“LifeWay is mitigating these losses as much as possible through various expense reduction plans, including staff reductions and cuts in non-employee expenses,” Mandrell said. “Additionally, LifeWay will likely have to use money from its reserves to cover a portion of the lost revenue.”
LifeWay reported a reserve balance of $44,389,000 at the end of the 2019 fiscal year last September, with no outstanding balances on its two available lines of credit. The organization confirmed to Baptist Press the line of credit balance is now $17 million.
LifeWay announced last week it is exploring options for the sale of Ridgecrest Conference Center and Summer Camps in North Carolina due to changes in organizational strategy, rising costs and uncertainty surrounding COVID-19.
Click here to read more.
Source: Baptist Press
BCNN1 WP 