47.4 F
Fort Worth
Thursday, November 26, 2020
Business Macy's to furlough majority of its 125,000 workers

Macy’s to furlough majority of its 125,000 workers

Other News

Left for dead, twice, RadioShack gets another shot online

SILVER SPRING, Md. (AP) — RadioShack, a fixture at the mall for decades, has been pulled from brink of death, again. It’s the most prized...

JC Penney sees bankruptcy protection exit by Christmas

NEW YORK (AP) — J.C. Penney believes it will emerge from bankruptcy protection before Christmas under a new ownership agreement that would save tens...

Petalo, not Charmin: Virus brings Mexican toilet paper to US

By JOSEPH PISANI AP Retail Writer NEW YORK (AP) — Toilet paper is back on store shelves. But you may not recognize some of the...

Mall owners close to buying JC Penney out of bankruptcy

By ANNE D'INNOCENZIO AP Retail WriterNEW YORK (AP) — Mall owners Simon Property Group and Brookfield Property Partners are close to a deal to...

NEW YORK (AP) — Macy’s says it will temporarily stop paying tens of thousands of employees who were thrown out of work when the chain closed its stores in response to collapsing sales during the pandemic.

The majority of its 125,000 employees, including stock people and sales clerks, will still collect health benefits, but the company said that it is transitioning to an “absolute minimum workforce” needed to maintain basic operations. Macy’s has lost the bulk of its sales due to the temporarily closing of all 500 of its stores starting March 18.

The move is perhaps the most dramatic sign that even big name retailers are seeing their business evaporate and that the $2 trillion rescue package passed by Congress and signed by President Donald Trump last week may have come too late for some.

Nordstrom said last week it was furloughing a portion of its corporate staff. And shoe company Designer Brands Inc., which operates DSW Designer Shoe Warehouse, furloughed 80% of its workers, effective this past weekend.

Analysts expect more furloughs to come as retailers scramble to pay their employees from fast-dwindling cash reserves. Labor is the single biggest monthly fixed cost for retailers, according to investment research firm Cowen & Co.

The furlough of workers will have negative consequences for an economy in which the retail industry supports one out of four workers.

“This could push us further into a damaging recession that will last longer than the duration of the crisis,” said Neil Saunders, managing director of GlobalData Retail.

More than 190,000 stores, including J.C. Penney and Neiman Marcus, have temporarily closed, accounting for nearly 50% of the U.S. retail square footage, according to Saunders. Discounters, grocers and wholesale clubs that sell essential items like groceries remain open, although they have their own challenges of keeping up with shoppers who continue to stockpile canned goods, paper towels and other staples.

According to a recent report by Cowen & Co, department stores have enough cash to make it to about five to eight months with their stores temporarily closed. Macy’s, however, has enough for five months, Cowen said.

When announcing the temporary closures, most retailers said they would keep paying their workers but they were looking at a two-week timetable. That moment has now passed and the furloughs have become increasingly necessary as the coronavirus rapidly spreads.

The big question is how much of these furloughs will lead to permanent layoffs. Rent the Runway, a pioneer in fashion rental, confirmed earlier Monday, that it was laying off its retail store staff and said it may not be able to reopen its stores that temporarily shuttered earlier this month. Its online subscription service still continues to operate.

Swedish retailer H&M said earlier this month that it may be forced to permanently layoff some its employees after temporarily shuttering 3,441 of its 5,062 stores globally.

Coresight Research’s Deborah Weinswig now forecasts a new record high of 15,000 stores will close this year, up from her original prediction of 8,000 — all because of the viral outbreak. Analysts believe that already ailing stores with heavy debt loads like J.C. Penney, and J. Jill may have to dramatically close more stores or be pushed closer to bankruptcy.

Even before the pandemic, traditional retailers, particularly department stores and mall-based clothing stores, had been struggling to reinvent themselves as shoppers shift more of their purchases online and embrace experiences like cooking classes and subscription services. Now, the pandemic has forced people to stay home and clamp down on spending for non-essential items like clothing.

Macy’s said that there won’t be as many furloughs in its online operations, which continue to operate. Employees who are enrolled in health benefits will continue to receive coverage with the company covering 100% of the premium.

“We expect to bring colleagues back on a staggered basis as business resumes,” Macy’s said.

To survive in the meantime, Macy’s, like a slew of other retailers, have taken steps to preserve their cash. Macy’s has suspended its dividend, drawn down its line of credit, frozen hiring and spending, and cancelled orders. It said Monday it is now evaluating all financing options.


close






Oh hi there 👋
It’s nice to meet you.

Sign up to receive awesome content in your inbox.

We don’t spam! Read our privacy policy for more info.

Latest News

Several local Walmart Supercenters remodeled in time for holidays

Fort Worth and Arlington residents will soon get a first look at the newly remodeled Walmart Supercenters at 9500 Clifford Street, 8401 Anderson St....

Retail trade group sees solid holiday sales despite pandemic

By ANNE D'INNOCENZIO AP Retail Writer NEW YORK (AP) — The National Retail Federation, the nation's largest retail trade group, expects that holiday sales could...

Grapevine company acquires San Antonio family business

Grapevine-based Able Machinery Movers, a heavy machinery-moving and rigging company, announced Nov. 24 the acquisition of Diamond E Rigging, a family-owned rigging and heavy equipment relocation business...

Arlington firm designing new hotel in Las Colinas

Arlington-based Type Six Design & Development has announced the firm has received zoning approval from the City of Irving for a new six-story Hotel...

New ownership at WineHaus

WineHaus Fort Worth announced a change in ownership and updates to the popular wine bar located at 1628 Park Place Ave. New owners Robyn Davis...