EXCLUSIVE:Premium Audio Company Owners Admit To Major Problems More Staff Axed
After axing Melbourne based distributor Qualifi in what was described as in a “totally unethical manner” and then after hiring Qualifi staff, to set up their own Premium Audio Company in Australia, Vox International is now wallowing with the business slashing over 150 staff while admitting they “don’t know what the future holds” for the US business, that also manufactures Klipsch Onkyo, Pioneer and Integra products.
In a letter to employees announcing the mass axing of staff Vox CEO Pat Lavelle, who also controls the Premium Audio Company, admitted that he does not know where the Company is going, claiming “There is no solace I can offer since the economic situations globally are beyond our control”.
He admits that the Company is mired in problems including falling sales, mounting losses and rising prices of components.
Questions are also being raised about the level of debt in the business.
The letter opens with “I’m pretty certain a feeling of dread would sweep over you – sensing where this communication is heading”.
He then uses the letter to announce the axing of over 150 staff. At this stage we don’t know how the Australian operation of the Premium Audio Company will be impacted. Only recently the sales manager of the Company quit, he has not been replaced.
Lavelle also admits that the business is putting in place new measures in an effort to cut soaring costs and lower overheads.
The latest cuts are on top of the big cuts in staff that the business who during COVID cut a deal in partnership with Sharp, to manufacture Pioneer, Integra and Onkyo products.
Premium Audio Company that now operates in Australia, is a wholly owned subsidiary of VOXX International.
In 2021 the audio Company along with Sharp Corporation, created a joint venture and has acquired Onkyo’s home audio/video business, which includes the Onkyo and Integra brands.
PAC now owns approximately 75% of the newly created joint venture with questions now being raised as to how they will fund the new business due to falling sales and rising costs.
In the letter Lavelle highlights that the business “reported a 13% decline in sales, lower gross margin, and operating losses in excess of $11 million for the quarter.”
“This is on top of a 16% revenue decline and losses of over $27 million in Fiscal 2023.” he wrote.
What was not in the letter was that Premium Audio Company saw its sales drop 32%.in the last quarter.
He did claim that “worldwide economies are in distress, and it is having a major impact on our business.”
“It is clear the global markets will continue to soften, as will certain areas of our operations.”
“Virtually all economists we speak to indicate that a recession in the U.S. will follow sometime in the fourth quarter of this year or early 2024.”
“The Company must lower expenses significantly in light of lower sales,” Lavelle wrote.
He admitted that the business is looking at every area of their business in an effort to cut costs.
He said that this includes “headcount, third-party contracts, supply agreements, manufacturing, SG&A and more.”
The Company that axed staff in 2022 ahead of their latest cuts has had a chequred past. This time round he said “However, we have not had to deal with the geopolitical issues impacting the global economies, inflation, higher interest rates, bank failures, credit card debt at an all-time high, and the supply chain. We have faced an unprecedented global pandemic and the lingering effects make this a unique and dangerous situation. That is why we are taking these actions.”
In their financials at the start of the year the business admitted to a global headcount of 1,055. Their latest cuts will see a 14% reduction taking the headcount to sub 900 staff.
VOXX is also taking other cost-cutting actions, such as eliminating overtime, limiting non-essential travel, and “looking at every process and expenditure to maintain as many positions as we can.”
There was no mention of whether the business will close down their subsidiary in Australia and move back to a distributor model.