Effective April 12, the majority of hourly in-store and distribution center associates in North America will be temporarily furloughed. Just how many people the news is affecting is unclear. But according to the company’s 2019 annual fiscal report, TJX Cos. employed nearly 270,000 people worldwide.
“These are unprecedented times,” Ernie Herrman, president and chief executive officer of TJX Cos., said in a statement. “While we have been making decisions we would never want to make, we are living through a global pandemic.”
TJX is working with government programs in Europe and Australia to help retain hourly workers during the crisis. Associates impacted in the U.S. and Canada are eligible to apply for unemployment and still have access to benefits, such as company health care, Herrman said.
“We are making every effort to prepare for reopenings, as soon as we believe we can operate safely in the communities we serve,” the ceo said. “I look forward to the future when we can reopen and be able to provide work and pay once again to many thousands of associates worldwide.”
In addition, TJX’s senior leadership team and members of the board of directors will take a temporary pay cut. The salaries of Herrman and Carol Meyrowitz, executive chairperson, will be reduced by 30 percent, starting April 12 through July 4, while other executives will receive a 20 percent pay reduction. The board also agreed to a reduction in its cash retainer during the same period.
According to the company’s 2019 proxy statement, Herrman’s base pay was $1.6 million, while his total compensation, including stock options and other incentives, was nearly $19 million. Meyrowitz’s salary was $1.04 million, with total compensation reaching $11.2 million.
The off-price retail company, parent to the T.J. Maxx, Marshalls, Sierra, Homesense and HomeGoods brands, was one of the last retailers to close shops last month as panic around the novel coronavirus spread across the U.S. On March 19, the company closed all of its 4,529 stores across Europe, the U.K., North America and Australia.
In addition, TJX closed three of its related e-commerce sites: tjmaxx.com, marshalls.com and sierra.com, along with its distribution centers and offices. At the time, the company said all associates, even those who could not work from home, would be paid during the shutdown.
On Tuesday — nearly three weeks later — the company said the stores, web sites and distribution centers will all remain closed until further notice.
“By keeping our stores and other facilities temporarily closed, we are supporting global efforts to help protect the health and safety of many people around the world,” Herrman said. “At the same time, we also take very seriously our responsibility to ensure the company’s long-term strength and stability well into the future, which has required making some difficult decisions in the near term.”
In addition to the furloughs, the company announced in March that it had drawn down $1 billion from its revolving credit facility, suspended the share repurchase program and was reducing capital spend.
Still, despite the short-term losses, the off-pricer might be one of the best positioned retailers once the crisis is over — and as a recession looms on the horizon.
In February, TJX Cos. reported its 24th consecutive quarter of comp growth and more than $12 billion in a single quarter, or $41 billion for the year. Shares of TJX Cos., which were up about 1 percent Tuesday, are down approximately 13 percent year-over-year amidst investor fears over the virus. The Dow Jones Industrial Average is also down more than 13 percent in the last year.
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