SAN FRANCISCO, NEW YORK CITY AND MENOMONEE FALLS, WIS. — Prominent retailers Gap Inc., Macy’s Inc. and Kohl’s have announced separately that they’re planning to furlough a majority of employees at their stores and some distribution centers beginning this week in response to the COVID-19 outbreak. Combined, the total number of affected employees is nearly 290,000, according to the Los Angeles Times.
The three retailers have extended their temporary store closures indefinitely to stop the spread of the novel coronavirus. The Centers for Disease Control and Prevention (CDC) reported that the United States has 140,904 confirmed cases of COVID-19 and 2,405 related deaths as of Monday, March 30.
Until stores begin to reopen, the companies will pause payments to a majority of their staff while still offering applicable benefits to those affected. Luxury retailer Neiman Marcus is also reportedly furloughing most of its 14,000 employees.
Gap (NYSE: GPS) has announced that its leadership team and board of directors will take a temporary reduction in pay. Gap’s brands, which include Gap, Old Navy, Banana Republic, Athleta, Hill City, Janie and Jack and Intermix, will still be available through the company’s online platform.
“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,” says Sonia Syngal, president and CEO of Gap Inc. “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.”
In addition to furloughs, Macy’s (NYSE: M), which also operates the Bloomingdales and Bluemercury brands, has implemented capital-saving measures including suspending its dividend, drawing down its line of credit, freezing both hiring and spending, stopping capital spend, cancelling some orders and extending payment terms.
Kohl’s (NYSE: KSS) announced that it will furlough store associates, distribution center workers and some corporate-level staff whose work has been significantly reduced due to the temporary store closures. Michelle Gass, CEO of Kohl’s, will also forgo her salary for the time being.
“It is an incredibly difficult decision to extend our store closures and temporarily furlough some of our associates,” says 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 at Kohl’s.”
Kohl’s has also drawn down its $1 billion revolving credit facility and decreased capital expenditures by $500 million, including reducing expenses for marketing, technology and operations while stores remain closed.
Kohl’s operates more than 1,100 stores across 49 states and nine distribution centers. As of Feb. 1, the Menomonee Falls, Wis.-based company owns 409 stores, leases 512 and ground-leases 238. Typical lease terms at Kohl’s stores span 20 to 25 years. The company’s stock price closed on Monday, March 30 at $15.90 per share, down from $70.21 a year ago, a more than 77 percent drop.
As of Feb. 1, Gap’s total store count was 3,919, including 574 franchise locations. The San Francisco-based firm’s stock price closed on Monday at $7.18 per share, down from $26.10 a year ago, a nearly 73 percent reduction.
Macy’s has significantly reduced its store count in recent years, but still operates 775 stores as of year-end 2019. The New York-based company’s stock price closed on Monday at $5.35 per share, down from $24.47 a year ago, a more than 78 percent drop.
— John Nelson