SunPower announced on Wednesday its intention to cut around 1,000 jobs and shift away from its direct sales channel as part of a restructuring effort to decrease costs after acknowledging misstatements in its fiscal 2022 results, revealed the day before.
SunPower's Cost-Cutting Measures
SunPower announced it will close its SunPower Residential Installation sites and discontinue SunPower Direct sales. These will now be managed by independent dealers and Blue Raven Solar, which was purchased for $165 million in 2021.
Approximately 1,000 employees, likely around 26% of SunPower's staff, will be affected by workforce reductions over the next few weeks. While the company reported 4,710 full-time employees as of Jan. 1, 2023, recent reports from Reuters suggest a lower figure of 3,800 employees. Individuals impacted by these job cuts are expected to have been notified today.
SunPower Transitioning to Dealer Network
After a brief transition period, all pipeline operations from pre-installation to system activation will be managed by Blue Raven Solar, full-service installation partners, and SunPower-certified dealers, meeting the company's integrity, design, quality, and customer service standards. Werner emphasized the commitment to maintaining customer experience at the highest levels of care with minimal timeline disruption during this transition period over the next month.
SunPower will focus on its Dealer Network and installation partners moving forward. Additionally, the company intends to maintain its involvement in new home-build construction projects. JP Morgan analysts noted that the restructuring would mainly eliminate SunPower's direct sales channel, transitioning the company toward third-party sales.
The SolarPower Job Elimination and Industry Challenges
Solar power and storage solution providers have encountered challenges due to increasing inventory levels and metering reforms in California, which have reduced the tariff that residential customers receive from the grid, diminishing the demand for solar installations.
SunPower, previously employing 3,800 full-time workers worldwide, anticipates incurring charges of approximately $28 million associated with severance benefits, early contract terminations, and specific write-offs.
In a letter to employees, SunPower's Principal Executive Officer, Tom Werner, explained that the company is taking steps to simplify its business structure, including removing areas where profitability has been challenging and enhancing financial controls.
Werner, who served as CEO for nearly two decades, was brought out of retirement earlier this year to take on the executive chairman role following CEO Peter Faricy's departure.
The company anticipates completing its restructuring plans by the second quarter.
SunPower has also faced challenges since expanding its business at the beginning of the decade. The company sold its large-scale O&M portfolio to NovaSource in May 2020, spun off its solar panel manufacturing arm to Maxeon in August 2020, and acquired Blue Raven Solar in October 2021 to refocus on residential efforts. It also sold its commercial installation division to TotalEnergies in February 2022 and recently lost its exclusive solar panel supply agreement with Maxeon last month.
This week, the company disclosed that it had discovered misstatements in its fiscal year 2022 results. It anticipates a decrease in income from continuing operations before income taxes and other adjustments for the year ending Jan. 1, 2023, ranging from $15 million to $25 million. One of the reasons for these misstatements is the incorrect classification of sales commissions as cost of revenue.
