Legg Mason (LM) to Lay Off 12% of Workforce to Reduce Costs
Legg Mason LM plans to lay off about 12% of its workforce or 120 employees, in sync with the company’s cost-cutting measures adopted while introducing an operating platform this February. The news was first reported by Bloomberg.
Most of the job cuts will be seen in human resources or finance departments. Also, about 100 employees will be ousted from the United States’ office, while the remaining will come from offices in Europe and Asia.
Also, the asset manager’s executive committee will be reduced to four members from eight previously.
In February, CEO Joseph Sullivan had said that the company rolled out an operating platform to cut costs and streamline its multi-affiliate model, due to which layoffs were expected.
Also, the move comes within a week of appointing Trian Fund Management LP’s Nelson Peltz and Ed Garden as directors, as Trian, which holds a 4.5% stake in Legg Mason, pushes for changes at the mutual fund company to boost returns.
Peltz said to work on the three top priorities, “significantly reducing costs, driving revenue growth organically and through acquisition, and increasing profitability.”
Layoffs by Other Asset Managers in 2019
Of late, asset managers have been undertaking cost-saving measures as the firms remain under pressure of the volatile markets and intense competition from low fee funds.
In January, BlackRock BLK announced the largest reduction in its headcount since 2016, i.e., 3% of the company’s global workforce. The company did not specify which businesses will be the most affected.
Also, as part of its efforts to improve operating efficiency, State Street STT began the layoff of 15% of the company’s senior managers. The job cuts affected senior managers, executive vice president and senior vice president positions.
Lastly, in April, Franklin Resources BEN planned to cut about 5% of its workforce, so as to save at least $75 million, in order to counter the continued outflows witnessed.
Legg Mason’s efforts to improve its financial position encourages us. Also, the company’s focus on expanding product offerings for its customers bodes well for the long term. Though declining revenues remain a key concern, prudent expense management and rising assets under management are favorable factors.
Shares of Legg Mason gained 27.6% over the past six months compared with the industry’s growth of 2.7%.
Legg Mason currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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