Macy’s Inc. (NYSE: M) announced on Monday that it will furlough a “majority” of its employees as a result of ongoing concerns about the coronavirus pandemic. Previously, the department store operator closed all of its stores on March 18.
Accordingly, the company will continue to pay health benefits and cover 100% of premiums at least through May.
As of the close of its fiscal fourth quarter, Macy’s reported that it had roughly 125,000 employees and 775 stores nationwide.
Note that Macy’s digital channels will remain open, but the company does most of its business through its stores.
An update from Macy’s:
While the digital business remains open, we have lost the majority of our sales due to the store closures. We’ve already taken measures to maintain financial flexibility, including suspending the dividend, drawing down our line of credit, freezing both hiring and spending, stopping capital spend, reducing receipts, cancelling some orders and extending payment terms, and we are evaluating all other financing options.
While these actions have helped, it is not enough. Across Macy’s, Bloomingdales, and Bluemercury brands, we will be moving to the absolute minimum workforce needed to maintain basic operations. This means the majority of our colleagues will go on furlough beginning this week. There will be fewer furloughs in our digital business, supporting distribution centers and call centers so we can continue to serve our customers online. At least through May, furloughed colleagues 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 stock traded down over 1% at $5.45 on Monday, in a 52-week range of $4.73 to $26.33. The consensus price target is $10.81.