Macy’s, the largest department store chain in the country, says it will furlough most of its 125,000 employees as all stores remain closed due to the COVID-19 outbreak. The company operates 775 locations under the names Macy’s, Bloomingdales and Blue Mercury. Furloughed employees will receive no pay.
Beginning April 1, all employees at the director-level and above who are not furloughed will have pay reduced and Macy’s CEO and the Board of Directors will receive no cash compensation.
Macy’s originally closed all stores since March 18th until March 31 but now there is no certainty as to when stores will be to reopen across the country.
Macy’s digital business remains open, but the company says it has lost the majority of sales due to the store closures. Macy’s is in a precarious financial situation with over $685 million in cash available as of February 1.
The company is suspending its dividend, drawing down available its line of credit, freezing both hiring and spending, stopping capital spend, reducing receipts, cancelling some orders and extending payment terms, and is evaluating all other financing options.
To conserve cash, Macy’s says nearly all employees will go on furlough beginning this week. There will be fewer furloughs in the digital business, supporting distribution centers and call centers so the company can continue to serve customers online. Furloughed colleagues who are enrolled in health benefits will continue to receive coverage with the company covering 100% of the premium at least through May.
Whenever stores can reopen, Macy’s expects to bring workers back on a staggered basis as business resumes.