J.C. Penney Co. Inc. has joined the growing number of major retailers furloughing thousands of workers.
On Tuesday, Penney’s said it will temporarily furlough the majority of store hourly associates, beginning Thursday, while reducing its corporate staff and extend the temporary closure of stores and business offices due to the coronavirus.
“These are difficult days all across the country and the globe. At J.C. Penney, we are making tough, prudent decisions to protect both the safety of our associates and the future of our company,” said Jill Soltau, chief executive officer. “We remain optimistic about J.C. Penney’s ability to weather this pandemic. We also believe these short-term solutions will have a long-term benefit for our associates, customers, and key stakeholders as we look forward to the day that we reopen our doors.”
So far this week Macy’s Inc., Neiman Marcus Group, Gap Inc., Kohl’s Corp., Ascena, RTW Retailwinds, Urban Outfitters Inc., L Brands Inc. and Cato Corp. have been among the retailers announcing massive furloughs affecting tens of thousands of store workers and staff at business offices. The retailers shut down all of their brick-and-mortar stores beginning in the third week of March, and with COVID-19 spreading rapidly, have decided to extend the closures through at least the end of April.
Also on Tuesday, Simon Property Group, the nation’s largest shopping center developer and operator, furloughed about one-third of its workers, and its ceo David Simon decided to waive his salary for as long as the pandemic lasts, according to media reports. Simon shut down all of its shopping centers in North America on March 18. CNBC reported that Simon had roughly 4,500 employees, of which 1,500 were part time, and about 1,000 people work at Simon’s home office in Indianapolis.
Penney’s seems particularly vulnerable to the pandemic, considering the company has been losing money and market share for well before the onset of the health crisis.
However, Penney’s said all furloughed associates will continue to receive health benefits and the company plans to cover 100 percent of employee-paid premiums for the duration of the furlough. Many impacted associates are also eligible to receive state unemployment benefits, which were recently increased with the passage of the federal stimulus bill.
Penney’s, like other retailers, has taken several actions to improve its cash position and financial flexibility during the pandemic, including deferring capital spend, utilizing funds available under the revolving credit facility, pausing hiring, cutting spending, reducing receipts, and extending the terms for payment of goods and services. The company has also suspended 2020 merit increases and is evaluating other financial options. E-commerce distribution centers and customer care will remain open, fulfilling online orders and answering customer inquiries.