REI is eliminating 61 full-time jobs, mostly at its Kent headquarters and Sumner distribution center, in response to a 65 percent drop in its annual profit, the outdoor gear and apparel retailer said.

Kent-based outdoor gear and apparel retailer REI said today it is eliminating 61 full-time jobs, mostly at its headquarters and Sumner distribution center.

REI also said it’s cutting an unspecified number of part-time hourly-wage jobs at about half of its 105 stores, as well as the Sumner facility.

The co-op reported a 65 percent drop in its 2008 profit, describing November and December as “very challenging.” Spokeswoman Megan Behrbaum noted that stores marked down prices more than planned to attract bargain-driven shoppers during the crucial holiday shopping period.

For the year, REI’s profit plunged to $14.5 million, from $41.4 million in 2007. Sales rose 6.9 percent to $1.4 billion, primarily because of a double-digit increase in Internet and catalog sales. Sales at stores open at least a year, which exclude nine newly opened stores, were flat compared with 2007.

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To cut costs, REI also is deferring pay raises for headquarters and management staff, letting job openings go unfilled except for those considered “critical,” and delaying or eliminating some projects and programs. Laid-off employees will get severance pay, help finding other jobs, and two years of access to the retailer’s employee assistance program.

“We are projecting essentially no growth in 2009, yet our expenses as a company continue to grow,” President and CEO Sally Jewell said in an email to employees today. “Our board of directors has faith in the long-term strength of REI and agreed on Monday to allow us to operate in 2009 with a reduced level of profitability during this tough economy.”

Also, REI said it will distribute $72.7 million in patronage refunds to 3.7 million active members, based on its sales. Later this month, members will begin receiving their dividends, which amount to 10 percent of their eligible 2008 purchases.

Last year, REI distributed $62.8 million to 3.4 million members.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com