Lucky Layoffs Signal Much Deeper Woes

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This past Thursday, more than a dozen employees were laid off at the Lucky Group, Lucky Magazine's new home after Condé Nast sold the title to e-commerce company Beachmint last August. The cuts came from both the bottom and the top of the masthead; founding beauty director Jean Godfrey June was given the title of editor-at-large, while executive fashion director Alexis Bryan Morgan is reportedly leaving for another job. Over the weekend, Racked learned that many of the employees, some of whom had worked at Condé for upwards of 16 years, were duped out of proper severance packages.

Things have been uncertain at the magazine (whose PR department did not respond to Racked's requests for comment) for some time. In January 2013, Lucky's publisher, Marcy Bloom, was fired and replaced by Gillian Gorman Round. The magazine then announced it would cut down on its number of issues, from 12 to 10 a year. By June, editor-in-chief Brandon Holley (who replaced founding editor Kim France after she was fired in 2010) had reportedly begun to butt heads with Anna Wintour, who was brought in to advise the magazine. As a result, she was replaced by current EIC Eva Chen.

Even with these changes in leadership, ad numbers continued to decline, as did the magazine's circulation. There were plenty of rumors that Lucky was going to shutter or go completely digital—Racked's own editors speculated about trouble at Lucky after the magazine tried to spin its sale to Beachmint as a way of embracing e-commerce, rather than Condé jumping ship.

Last year, WWD pointed to Lucky's dwindling ad pages, which fell "4.1 percent to 72.43 pages in October, 25 percent in November to 62.73 pages, and 23.5 percent in December to 87.64 pages." For September, the magazine industry's biggest month, Racked reported that Lucky came in last place in 2014, with just 90 pages of ads, down 34 percent from the previous year (compare that to Vogue, which had 631 pages).

A source close to the situation tells Racked that employees were strong-armed into joining the Lucky Group over the summer; when Condé sold the magazine to Beachmint, the company told employees they had to transition or be forced to quit on the spot. Staffers who went on to join the Lucky Group were under the impression that if they stayed on, they'd be entitled to severance packages commensurate with the years they had spent at Condé. When they were laid off last week, they were offered just two weeks worth of compensation, which would only be granted if they signed releases from Lucky and Condé Nast.

The timing isn't coincidental: Condé's sale of Lucky to Beachmint included a six-month grace period in which employees were still entitled to Condé Nast benefits. Sources tell Racked that the Lucky Group waited until that period expired on Feb. 1 to lay off employees—one source said around 15 staffers were let go—to avoid paying severance. Such a move signals serious financial troubles for the publication, which was launched in 2000.

"Paying senior employees large severance packages could put the magazine out of business," Daniel Bellizio, a New York-based fashion lawyer who deals with employment matters, tells Racked. "Unfortunately, there's no law that mandates giving severance packages that meet the amount of time employees put into a company unless it's in writing, but it's in bad taste. There's something to be said about doing the right thing to the people who have helped with a company's longevity and profitability, especially at the top of the food chain."

"Lucky is obviously going through a major shift, and staffing changes are to be expected," notes a former Lucky staffer. "They're changing the model of how traditional publishing works, and it's completely uncharted territory that many magazines will face in the near future. I'm sure whatever they're doing is strategic and has been done with Lucky's interests at heart. They're focusing on the future, and that's the most important, and often forgotten, thing to do."

The magazine is putting on a good face in spite of the layoffs. Speaking to the New York Post on Friday, Lucky President Gillian Gorman Round called the Lucky Group "very financially robust." However, the thinning of the staff is perhaps foreshadowing an imminent shutdown of the physical magazine. In November, the magazine laid off three editors, and the current round of layoffs has everyone but two assistants from the market department gone; editors from the photo, booking, and special projects departments were also let go.

Staffers still navigating the waters at Lucky tell Racked that the atmosphere is "strained," as the team is working on the launch of the new Lucky website, Lucky Shops, which rolls out today. LuckyMagazine.com now redirects to this joint editorial/e-commerce venture.

Update: Another former Lucky staffer tells us that when the magazine was sold to Beachmint over the summer, employees' 401(k) plans were also frozen. In addition, staffers were forced to sign non-compete agreements that barred them from interviewing for jobs at Condé Nast for six months. Lucky was not allowed to hire Condé Nast employees during this same period.

"The problem is that they can't sell an advertising page to save their life and the magazine is still expensive to produce," our tipster wrote. "The photographer of the March cover story makes more money in one day than several staffers, who were laid off, make over the course of an entire year. It really is such a shame, as well as fiscally irresponsible."

We will continue to update this developing story. Have a tip? Email us.