Macy's on Monday said that the measures announced last week to shore up its finances have helped but are "not enough," so it's placing most of its workforce on furlough beginning this week. That includes employees in its digital business, distribution centers and call centers, though there will be fewer furloughs in those areas. As of the fourth quarter, Macy's reported 125,000 employees.
At least through May, furloughed employees with health benefits will continue to receive coverage, with Macy's covering the entire premium. "We expect to bring colleagues back on a staggered basis as business resumes," per a company press release.
All Macy's stores "have been closed since March 18th and will remain closed until we have clear line of sight on when it is safe to reopen," the company also said. As of the fourth quarter, Macy's had 775 stores.
Macy's has little choice but to place human health above all other concerns during this time, but its employees are taking the brunt of the consequences.
These moves come on the heels of last week's announcement that CEO Jeff Gennette will forgo compensation, executive pay will be reduced, its quarterly dividend suspended, capital spending deferred and hiring frozen — effectively hitting pause on its recently devised turnaround. The retailer noted that it has lost "the majority of our sales" due to the store closures, despite its digital business remaining open.
"The COVID-19 outbreak continues to take a heavy toll on Macy's, Inc. business," the retailer said Monday. "Our top priority is the health and safety of our customers, colleagues and communities during this unprecedented crisis."
Labor is a major expense for any retailer, made that much more dear when stores are forced to close. Initially, Macy's was among those paying store staff despite shuttered doors.
Cowen & Co. in a note last week estimated that the department store has 20,000 corporate employees and 100,000 store associates (evenly split between full- and part-time). With a workforce that size the analysts estimate the company spends $227 million each month on labor, with $119 million going to corporate and support staff and $108 million to store associates.