April 25, 2019 - 10:04 am
Updated April 25, 2019 - 4:32 pm
MGM Resorts International informed 254 people Thursday that they have lost their jobs as the company seeks to slash labor costs by $100 million.
The Las Vegas-based gaming company intends to announce more job cuts in a few weeks, CEO Jim Murren said in a note to employees on Thursday. He did not say how many people would be let go in the next round.
“I know this day is going to be difficult for everyone. I also know that changes like this can be stressful and I regret the impacts on the individuals whose roles are being eliminated. We would not be taking these steps if we did not believe they were necessary to serve the long-term interests of the Company,” Murren said in the statement.
MGM announced the job cuts initiative in January as part of an overall plan to boost operating cash flow by $200 million to as high as $3.9 billion by next year.
The resort operator has already accepted the voluntary resignation of several top executives as part of the program, including former CFO Dan D’Arrigo and former MGM Grand President Scott Sibella.
Thursday’s job cuts affect managers only and not union workers, the company said. Employees who lose their jobs will receive career transition services.
MGM spokesman Brian Ahern declined to say how much the company would save from Thursday’s job cuts. Union workers earn an average of $25 an hour, less than managers, implying the latest cuts will save the company well north of $13 million a year.
The resort operator has been under pressure by investors to improve earnings and boost the share price. The company’s stock has underperformed the overall market over the past eight months.
Shares of MGM have fallen 12 percent since August compared with a 4 percent gain for the S&P 500 as Strip revenues disappointed. MGM shares fell 5.5 cents, or 0.2 percent, to $27.75 in Thursday trading.
The company will announce first-quarter earnings Monday. Strip gaming revenue fell 3.2 percent during the quarter, forcing analysts to cut their MGM earnings forecast.
With Strip revenue forecast to grow just in the low single digits in the coming years, MGM needs to aggressively cut cost to boost earnings, analysts have said.