REI CEO sees ‘clear path' to profitability, after shrinking losses

Buoyed by a slight improvement in financials during her first year on the job, REI Chief Executive Officer Mary Beth Laughton is trying to usher in a new era at the Issaquah-based co-op.

REI, founded in Seattle almost 90 years ago, has built a reputation as a forward-thinking outdoor retailer driven by its members. But the brand hit a financial roadblock after the COVID-19 pandemic, which - exacerbated by other market headwinds - kept it in the red for several years.

The co-op had around 12,500 employees at the end of last year - the fewest in eight years, following a slew of layoffs. Though the retailer raked in billions, last year's sales were largely flat, according to its 2025 annual impact report scheduled to be released Monday. Net losses amounted to about $54 million - almost a third of the losses recorded the previous year.

We still lost money, but we are on a clear path - and we see a clear path - to full-year profitability," Laughton said in an interview Thursday.

In recent years, competition among retailers has heated up, and consumer behavior has changed. Despite this shifting landscape, Laughton wants to make REI profitable, spearheading a plan that prioritizes the retailer's product assortment, service and membership offerings over expansion.

As of the end of last year, the co-op had more members than ever: over 26 million.

Laughton remains confident about REI's future in the face of unknowns. "We are seeing momentum right now," she said.

'A lot of opportunity here'

Similar to other retailers, REI has ridden a rocky road since 2022.

David Swartz, a senior equity analyst at investment research company Morningstar, said he was taken aback by the co-op's lagging financial performance.

"You wouldn't think that it would be struggling like it apparently is, to be honest," he said Friday. "The outdoor market has been challenging, but it's not like it's been disastrous."

Still, Laughton, a longtime REI member from Chicago, sees some bright spots in the co-op's financials. Last year, REI gained more than $100 million in profit, and it marked three consecutive quarters of sales growth, she said.

These wins come as Laughton proceeds with a strategic plan she rolled out last year. The plan aims to establish REI as "the most trusted retailer for people who love the outdoors" through its culture, product offerings, service and membership.

For instance, after members mourned the end of Experiences, which included outdoor classes and tours, REI revived in January a new take on the benefit by offering trips planned through Intrepid Travel to domestic and global destinations.

Laughton's approach is an attempt to help REI stand out among a burgeoning crowd of competitors.

Other players in the market include retail giants Amazon and Walmart, Swartz said, alongside sporting goods and outdoor recreation companies Dick's Sporting Goods, Bass Pro Shops, Cabela's and Academy Sports and Outdoors.

For now, Laughton isn't in an expansion mindset at REI.

Instead, she's focused on boosting productivity and performance at existing locations, with no plans to open many stores in the coming years.

Looking forward, Laughton hopes to build a co-op with a healthier business model and financials "that allows us to thrive for another 88 years."

In order to succeed, Michael Laurie, an REI member on Vashon, believes the brand needs to lean into its co-op identity.

"In a traditional, for-profit business, the upper management and the board make most of the decisions about how it will operate," he said Friday. "But a co-op is cooperatively owned, so it's supposed to be much more democratically run."

Laurie wants REI to involve members in more of the decision making, particularly on issues like increased wages for workers.

"REI should at least give it a try," he said.

'Tough period for REI'

Laughton inherited a retailer under pressure.

Former REI CEO Eric Artz, who retired in March 2025, passed her the gauntlet. He started at the co-op in 2012 as its chief financial officer and was promoted to CEO seven years later.

Laughton, a corporate veteran who worked her way up the ranks of large companies such as Nike and Sephora, was on REI's board of directors from 2017 to 2019. She said those years gave her a broad view of the business.

Then came COVID. During the pandemic, Laughton said that the company saw a spike in consumers, but, "post-COVID, people got back to normal lives, and some of that fell off."

Swartz agrees that a boom in sporting goods and sportswear took place over the first two years of the pandemic.

That was significant for the industry because "the sporting goods space in general has not been very strong for many years," he said. "There's been a number of sporting goods retailers that have downsized or even gone out of business."

Swartz pointed to companies like Minnesota's Gander Mountain and Maine's Olympia Sports that shuttered for good over the past decade.

At the co-op, Artz stood at the helm of a retailer rocked by unprofitability in the postpandemic era, turning to layoffs and the withdrawal of Experiences - phased out completely by last year - to course-correct.

"The co-op, like many businesses, was recovering from kind of these swings in demand and inventory," Laughton said. "That did lead to a tough period for REI."

In 2024, under Artz, REI garnered $3.5 billion in net sales - a 6% slip from the year prior - and $156 million in net losses.

Co-op members and business partners took note of the tumble.

Kirk Hoessle, president and CEO of Alaska Wildland Adventures in Girdwood, Alaska, is a small-business owner who was burned by the changes: namely, the cancellation of Experiences.

He became an REI member in the 1970s after a visit to the Seattle store, saying it made him "part of this earthy kind of organization that really gives back to the environment and treats people well."

Hoessle's tour company partnered with REI from 2018 to 2024 to operate Alaska itineraries. The retailer's cancellation of its Experiences meant it pulled $1 million in sales last year from Alaska Wildland Adventures.

"It was a good business relationship until it wasn't," he said Friday. "It made a very tough financial situation for us."

Union negotiations

REI leadership has one significant test ahead: how to handle the unions.

The co-op's negotiations with two unions - the United Food and Commercial Workers International Union and the Retail, Wholesale and Department Store Union - to reach a collective bargaining agreement have fallen flat thus far.

"Negotiations take time, and they're complex," Laughton said. "We remain really engaged in good faith bargaining and just focused on outcomes that are good for employees and good for the long-term health of the co-op."

Workers at an REI store in New York City were the first to unionize in 2022. Out of around 200 stores across the country, 10 other locations, including one in Bellingham, have joined in their efforts to push for wage bumps, increased staffing and job protections.

Those employees rejected a proposed contract in February, with the union calling it "inadequate."

In April, they approved a boycott of the co-op's anniversary sale, which takes place this month, union spokesperson Rich Smith said Friday. "To date, 70,000 REI members pledged to join workers and support the boycott."

The ongoing fight between the company and the union could sour customer attitudes, in Swartz's opinion.

He said REI is perceived as different from a standard for-profit company, which has helped it win the allegiance of some consumers.

"They perceive it as a company that's more interested in their customers and employees than they are in profits," Swartz said, "and that kind of gets blown up when there's headlines about them fighting unions. Then they sound a lot like Amazon."

One customer, Denise Diskin, has followed the unionization campaign closely.

The Seattleite is an REI member raised by parents with their own memberships. She appreciates the company's values, particularly its inclusivity, and its employees, whom Diskin considers to be in-house experts.

So she said she was surprised at the lengthy negotiations and the current impasse.

"It has changed my shopping patterns," Diskin said. "I think really carefully and look for other options before I go to REI to purchase things."

But Laughton wants to make the case to Seattle that REI is the one for them.

"Seattle is our home," she said. "That is where we were founded, and it's really important to us that we stay connected to those Pacific Northwest roots.

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