Macy’s Inc., Gap Inc., Kohl’s Corp., Neiman Marcus Group and other major retailers are moving fast to cope with the coronavirus by using massive furloughs and extending the duration of store closings.
On Monday, Macy’s, citing “the heavy toll” the coronavirus is taking on the business, including losing the majority of its sales, said it will furlough most of its workers this week, impacting tens of thousands of employees. Asked how many employees would be furloughed, a Macy’s spokeswoman said there’s “no exact number to share at this point beyond ‘majority.’” According to the macys.com web site, the $24.6 billion retailer has about 125,000 employees and 775 stores.
The move follows previous dramatic steps taken by Macy’s Inc. in the past few weeks to deal with the health crisis and maintain financial flexibility, including closing all stores on March 18, suspending the dividend, drawing down on the line of credit, freezing both hiring and spending, stopping capital spend, reducing receipts, canceling some orders and extending payment terms from 60 to 120 days. The company is evaluating other financing options as well.
Kohl’s will temporarily furlough store and store distribution center associates, as well as some corporate office associates whose work has been significantly reduced by the store closures.
According to Kohl’s 2018 annual report, the retailer employed an average of approximately 129,000 associates, including about 34,000 full-time and 95,000 part-time associates.
The company will continue to provide existing health benefits to furloughed associates at this time. Kohl’s noted that those impacted may benefit from recently passed coronavirus stimulus legislation. As previously announced, Kohl’s provided two calendar weeks of pay to all store and store distribution center associates.
Gap Inc., which operates Gap, Old Navy, Banana Republic, Athleta and Intermix, is furloughing the majority of its store teams in the U.S. and Canada, pausing pay but continuing to offer applicable benefits until stores are able to reopen. The company is also reducing headcount across its corporate functions around the world, and the entire Gap Inc. leadership team along with the board will take a temporary reduction in pay.
“After taking the extraordinary measures of temporarily closing all of our company-owned stores in North America and Europe two weeks ago, we are now in a position where we must take deeper actions. Each decision, however difficult, has been made to ensure that we build toward a future where Gap Inc. can come out of this stronger — for our customers, our shareholders and, most importantly, our teams,” said Sonia Syngal, president and chief executive officer, Gap Inc. “We know that tens of thousands of people rely on us to support themselves and their families, and that millions more around the world rely on our business. We are doing everything we can to provide support during this time, and we are intensely focused on welcoming back our store teams and customers as soon as we are able.” That includes establishing an employee resource center to identify and apply for temporary roles at other retailers that remain open and are hiring, which would include Target and Amazon.
At Kohl’s, “It is an incredibly difficult decision to extend our store closures and temporarily furlough some of our associates,” said chief executive officer Michelle Gass. “We look forward to the day that we can reopen our stores to welcome our associates back and serve the millions of families across the country that shop Kohl’s.”
The Neiman Marcus Group, which has 14,000 employees, has put a large part of its organization on temporary furlough while others who have not been furloughed are taking temporary salary cuts. The reductions will be implemented on April and last at least through April 30 when the situation will be reassessed.
In addition, the Dallas-based luxury retailer, which has talk of bankruptcy swirling around it, has extended the duration of its temporary store closings through the end of April, and has entered into “partnerships” with other retailers including CVS, Kroger, Costco, Target, Home Depot and Lowe’s, whereby Neiman’s will send furloughed workers to those and other stores. NMG originally said it would keep all of its stores closed until April.
“This is a truly unprecedented time. We are extending the temporary closure of all our stores until at least April 30, and likely longer, to protect the health and safety of our customers and our associates,” said NMG ceo Geoffroy van Raemdonck. “We have already taken a number of actions to protect our business, but we’re now required to take employment-related actions. A large portion of our organization will either be put on furlough or take temporary salary reductions. We will reassess whether the store closures and corresponding furlough will continue beyond April 30 as the date approaches. I have decided to waive 100 percent of my salary to do my part to support our company, and my direct reports have also decided to waive a significant amount of their salary as well during this temporary furlough. While these are the most difficult decisions to make, our focus is on ensuring our business is protected over the long-term so we can continue serving our associates and customers.”
Health benefits and 401Ks remain in place, the company said. In addition, the company is using its alterations staff and facilities to begin creating nonsurgical, personal protective equipment including masks, gowns, and scrubs for front-line healthcare providers. Joann Stores has provided NMG with fabric and patterns.
Limited Brands on Friday announced intentions to furlough a large portion if its workforce, as well as reducing pay to some senior executives by 20 percent and members of the board including founder Leslie Wexner receiving no pay at all.
Ascena, which operates Lane Bryant, Ann Taylor, Loft, Catherines Lou & Grey and Justice, will furlough all of its employees including half its corporate staff, and cut executive salaries in half. Distribution centers will remain open to service the online operations. Ascena has approximately 50,000 employees. The headcount was drastically reduced with the recent liquidation of the Dressbarn division.
RTW Retailwinds, which operates New York & Co. and Fashion to Figure stores, said it would furlough all store associates as well as a significant portion of its corporate home office associates, resulting in an approximately 80 percent reduction in weekly payroll expense. The company will provide furloughed associates with continued benefits coverage and support to identify potential government assistance during this temporary furlough.
“In this time of unprecedented volatility and disruption to the retail sector, we are taking the necessary actions to protect our customers and employees, and preserve our financial liquidity and flexibility,” said Traci Inglis, incoming ceo of RTW Retailwinds. “We are extending our store closures at this time and have made the difficult decision to furlough employees in our field operations and corporate home office. This was not a decision made lightly, but one that was necessary to preserve liquidity in order to manage our business through this challenging time.”
Across the Macy’s, Bloomingdale’s and Bluemercury brands, the company “will be moving to the absolute minimum workforce needed to maintain basic operations. This means the majority of our colleagues will go on furlough beginning this week,” Macy’s said in a statement Monday. “There will be fewer furloughs in our digital business, supporting distribution centers and call centers so we can continue to serve our customers online. At least through May, furloughed colleagues who are enrolled in health benefits will continue to receive coverage with the company covering 100 percent of the premium. We expect to bring colleagues back on a staggered basis as business resumes.”
“The COVID-19 outbreak continues to take a heavy toll on Macy’s Inc. business. Our top priority is the health and safety of our customers, colleagues and communities during this unprecedented crisis,” the company said Monday.
Macy’s also said that all of its Macy’s, Bloomingdale’s, Bloomingdale’s Outlets, Blue Mercury and Backstage stores will remain closed “until we have clear line of sight on when it is safe to reopen. While the digital business remains open, we have lost the majority of our sales due to the store closures.”