Even the federal government’s call for help to mass produce facial masks was not enough to prevent furloughs among some firms.
HanesBrands, parent company to Hanes, Champion, Playtex, L’eggs and Bali, among others, on Tuesday unveiled furloughs for about 5,800 employees, a mix of full-time and part-time associates, along with pay cuts for others.
Like many companies, HanesBrands temporarily closed its brick-and-mortar shops last month, some 1,200 brand stores in North America, Europe and Australia, as the coronavirus spread across the globe.
But that didn’t mean associates weren’t hard at work. Over the weekend of March 21, the U.S. Department of Health and Human Services approached HanesBrands about mass producing cotton masks for front line workers under a contract with the U.S. federal government. At the time, the apparel and intimates manufacturer estimated it would make as many as 1.5 million face masks each week.
As of April 7, just two-and-a-half weeks later, the company said it had already delivered about 10 million masks, was ramping up production to make 40 million a week and had plans to make a total of 320 million masks.
Meanwhile, in-store associates in North America, Europe and Australia were guaranteed pay when the two-week store closures were first revealed in March, according to the company. But as the deadline for social distancing was extended (until at least April 30 in the U.S.), stores have been forced to remain closed. The company has roughly 200 stores in the U.S., nearly all of which are in outlet centers and are currently closed.
HanesBrands is now moving all in-store associates (about 1,800 in the U.S.), along with an additional 575 non-store employees, to furlough status.
“We are taking actions today to ensure we navigate the pandemic for a successful future for all of us,” Gerald Evans Jr., HanesBrands’ chief executive officer, said in a statement. “We also are proactively taking measures to assure balance sheet flexibility and liquidity, seeking to limit the impact on employees and making fast-recovery plans to take advantage of market needs when the pandemic wanes.”
Evans, who is set to retire in January, added that the company plans to “call these full-time and part-time employees back to work as soon as stores can be reopened.”
The company, which has about 63,000 people on its payroll in more than 40 countries, said furloughed employees will continue to receive benefits, such as health care and life insurance, during this time.
In addition, HanesBrands is instituting pay cuts for executives and salaried employees, ranging from 10 percent to 30 percent, depending on the employee level.
Other cost-saving measures include limiting discretionary and capital spend, temporarily relaxed production levels (with the exception of facial masks) to better control inventory, pushing the company’s e-commerce business and taking measures to increase flexibility on the company’s balance sheet.
On March 25, HanesBrands drew $630 million on a revolving credit facility to increase its cash position. Evans said the company now has about a billion dollars in cash on its balance sheet.
Shares of HanesBrands, which were trading up nearly 13 percent on Wednesday, are down 47.5 percent year-over-year.