Major U.S. retailers Macy’s Inc, Kohl’s Corp and Gap Inc said on Monday they would furlough tens of thousands of employees, as they prepare to keep stores shut for longer to curb the spread of the coronavirus outbreak.
Kohl’s also said it would suspend its share repurchase program, evaluate its dividend plan and draw down $1 billion from an existing credit line, joining a growing list of companies seeking to shore up their cash reserves to weather the financial hit from the health crisis.
Macy’s and Gap have suspended their dividends and have also tapped into their credit facilities.
Gap said the furloughs will affect its store employees in the United States and Canada. The company had about 129,000 employees at the end of last year.
The action will impact a majority of it's about 130,000 employees, Macy’s said, while all workers at store and store distribution centres, as well as some corporate office associates will be affected, according to Kohl’s.
Shares of Kohl’s, which had about 122,000 employees in 2019, closed down nearly 9%. Macy’s stock ended nearly 3% lower.
“Given these extraordinary circumstances, we are taking difficult and decisive actions to strengthen our financial liquidity,” Kohl’s chief executive officer Michelle Gass said in a statement. Gass said she will not take a salary.
Widespread lockdowns to arrest the spread of the outbreak in the United States have hammered sales for brick-and-mortar retailers as most stores remain closed, despite their online business staying up and running.
President Donald Trump on Sunday extended his stay-at-home guidelines until the end of April, dropping a hotly criticized plan to get the economy up and running by mid-April after a top medical adviser said more than 100,000 Americans could die from the outbreak.
The pandemic, which has killed about 34,000 people across the globe, has compounded sales pressure for retailers already facing stiff competition and a shift to online shopping.
Kohl’s said furloughed employees would continue to get health benefits. Macy’s specified that employees enrolled in health benefits will continue to receive coverage, at least through May.
Macy’s said it would maintain the “absolute minimum” work force needed to maintain basic operations across its Macy’s, Bloomingdales and Bluemercury brands.
The retailer added there would be fewer furloughs in its digital business, supporting distribution centres and call centres, while Kohl’s said it would start buy online and pick up-at-store services later this week.