Gap Inc. (NYSE: GPS) and Urban Outfitters Inc. (NASDAQ: URBN) are the newest retailers joining the list of companies that are furloughing employees in the wake of the COVID-19 pandemic. Big names like Macy’s have already come out with their plan, and these plans look no different.
Gap said it will furlough the majority of its store teams in the United States and Canada, pausing pay but continuing to offer applicable benefits until stores are able to reopen. The company also has made the proactive decision to reduce headcount across its corporate functions around the world. Additionally, the entire Gap leadership team, along with the board of directors, will take a temporary reduction in pay.
Sonia Syngal, president and CEO of Gap, commented:
We know that tens of thousands of people rely on us to support themselves and their families, and that millions more around the world rely on our business. We are doing everything we can to provide support during this time, and we are intensely focused on welcoming back our store teams and customers as soon as we are able.
Gap stock traded down about 2% to $7.26 on Tuesday, in a 52-week range of $6.04 to $27.00. The consensus price target is $11.34.
Urban Outfitters announced global retail stores will remain temporarily closed until further notice due to the continued spread of the novel coronavirus. In this case, Urban Outfitters is furloughing a substantial number of store, wholesale and home office employees for 60 days beginning April 1. Impacted employees will continue to receive enrolled benefits during the furlough period.
Urban Outfitters is taking a few other measures as well:
- Borrowing $220 million to protect cash reserves.
- Reducing the capital budget by over $100 million by delaying or canceling projects.
- Suspending the payment of rent temporarily and delaying or canceling some planned new store openings.
- Reducing all non-payroll expenses, including creative, marketing and travel.
- And finally, reducing senior leadership compensation for the duration of the furlough period, eliminating directors’ cash compensation for the remainder of the fiscal year and suspending stock buybacks for the foreseeable future.
Urban Outfitters stock traded up less than 1%, at $14.65 in a 52-week range of $12.34 to $34.24.
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