The retail bloodbath continued Tuesday as more major chain retailers said they would furlough employees, suspend rent and institute executive-level pay cuts to get through the coronavirus crisis.
The parent company of Urban Outfitters, for instance, said in a Securities and Exchange Commission filing that it was furloughing a “substantial number of store, wholesale and home office employees” for two months while continuing to provide benefits.
“This is the first time in our 50-year history we have furloughed employees,” CEO Richard Hayne said. “It’s a painful decision that we do reluctantly.”
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The retailer, whose stock fell over 2 percent Tuesday, has had its stores shut since March 14 but also said it would suspend rent payments and delay or cancel new store openings. It joined other major retailers, including Subway, that already had warned their landlords not to expect rent. Urban Outfitters will also put hiring on hold, eliminate bonuses and slash its executives’ pay.
It’s hardly the only national chain struggling.
Ralph Lauren, in an SEC filing, said it, too, would pause nonessential capital build-outs and review all of its real estate projects. The company, which also has temporarily shuttered its stores, has drawn down $475 million from its credit facility.
Guess? Inc. and J. Jill also said they are furloughing their store personnel. Executives also will see their pay cut at both companies.
Even Dollar Tree, considered a success story as other retailers have floundered in recent years, said Tuesday it would withdraw its guidance for the quarter and year. Thanks to the sale of household goods and food, same-store sales have risen so far this quarter from the same time in 2019. But in the past week, sales have plummeted for the company’s Dollar Tree branch of stores — the parent company also owns the Family Dollar chain — and the firm said it has concerns about its ability to restock other merchandise.
The company’s first-quarter spending also is panning out to be higher than expected. The retailer said it would pay workers more for their work throughout the crisis and the extra hours spent disinfecting stores, warehouses and its store support center.
On Monday, two major department stores — Macy’s and Kohl’s — said they were furloughing workers because of coronavirus-related store closures. Macy’s said the layoffs would hit the “majority” of its nearly 175,000 workforce, and Kohl’s, which previously said it would lay off employees for two weeks with pay, said it was furloughing most of its workers. Kohl’s is fully drawing down its $1 billion credit facility.
Layoffs are starting to hit retailers’ landlords as well. Simon Property Group, the largest mall owner in the country, reportedly is temporarily laying off nearly a third of its workforce and permanently laying off an unknown number of employees. The real estate investment trust shuttered its malls earlier this month. While many Americans were initially asked to stay at home for a couple of weeks, the prospect of social distancing continuing through April and beyond has grown as the number of Covid-19 cases and deaths escalates around the country.
The closures of stores, malls, restaurants and hotels led a record number of Americans to file jobless claims — a figure that some anticipate will grow in the weeks ahead.
Write to Mary Diduch at md@therealdeal.com