As the coronavirus crisis continues to grip the nation, many retail leaders are taking personal hits to try and save their organizations from complete collapse. Others are relying on furloughs to provide liquidity, and cutting swathes of employees loose in the process.
TJX Companies, the Massachusetts firm that owns TJ Maxx, Marshalls and HomeGoods, among other brands, released a copy of a Form-8K filing from April 1 on Tuesday.
The document showed that the Executive Compensation Committee (ECC) of its Board of Directors, along with its executive officers, agreed to salary reductions for the company’s highest-ranking employees.
The pay cuts, which will take effect on April 12, include the base salary of Ernie Herrman, TJX’s president and CEO, along with executive chairman Carol Meyrowitz. Both will see 30 percent reductions in pay.
The base salaries of all other executive officers will see 20 percent cuts, while the ECC also approved undescribed reductions for other senior members of the company until July 4.
The Board of Directors agreed to a reduction in each member’s cash retainer fees for the same period.
The document, signed by TJX’s chief financial officer Scott Goldenberg, pointed to other recent measures that the firm has taken to protect the livelihood and safety of its employees in recent weeks.
On March 19, TJX brands temporarily shuttered their stores, online businesses and corporate offices. The company said it was continuing to monitor developments and government requirements at the state and local level, adding that it expects the cadence of re-openings to vary by region and country.
TJX has agreed to pay its associates through the week of April 11, and said it was implementing temporary furloughs for the majority of store and distribution center staff across the country after that date. Furloughed employees will be eligible for benefits during this time, at no cost to them.
Comparable actions will be taken across portions of the firm’s workforce outside of the U.S. as well, the document said.
“TJX is working to prepare for re-openings as soon as the Company believes it can operate safely in the communities it serves,” Goldenberg wrote. “As the COVID-19 pandemic is complex and rapidly evolving, the Company’s plans as described above may change.”
At this point, he said, TJX “cannot reasonably estimate the duration and severity of this pandemic.”
The temporary closure of stores and distribution centers is expected to have an adverse impact on its operations, financial position and liquidity, the chief financial officer advised.
Denver-based VF Corporation, owner of brands including The North Face, Timberland and Vans, released its own statement on Tuesday detailing temporary pay cuts for its executives and Board of Directors.
“Since the beginning of the COVID-19 outbreak, we’ve managed our response strategies with a people-first approach that prioritizes the health and well-being of our employees around the world,” Steve Rendle, chairman, president and CEO of VF Corp said in a statement. “These new actions position us to continue supporting our people while also taking prudent measures to protect the financial integrity of our company as we manage through the prolonged disruption caused by this global health crisis.”
Rendle’s own salary will be halved over the next four months, while the base salaries for VF’s Executive Leadership Team will be temporarily reduced by 25 percent.
VF’s Board of Directors will entirely forgo their cash retainers over the next four months, the memo said. The company will reassess the reductions after that time and modify their duration as necessary.
All VF offices and retail stores across North America will remain closed through the month of April, and are set to reopen on May 3. Retail staff will continue to receive full pay and benefits during this time, while office employees are continuing to work remotely.
Across the globe, VF offices remain closed and corporate employees have been asked to work from home until the tentative date of May 3.
Stores in Europe, the Middle East and Africa are closed until further notice, and VF said it has temporarily reduced the working time for all employees in order to leverage regional government support programs. Office, wholesale and warehouse employees in these areas are being kept at or above 95 percent of their normal pay, while retail workers are receiving full pay in most regions.
Most of the company’s offices in the Asia-Pacific region are also still closed, with employees continuing to work from home. However, most retail stores, especially in Mainland china, have re-opened for business. All employees are receiving full pay and benefits, the statement said.
The company is also providing up to two weeks, or 14 days, of emergency pay to its distribution center employees across the U.S. and Canada, and has extended this benefit through May. Outside of North America, VF will provide full pay and benefits to its distribution center staff in accordance with local laws.
The company noted that all facilities are subject to strict social distancing protocols and measures like temperature screening, increased protective equipment, reduced and rotating shifts, and high-frequency cleaning of highly trafficked areas.
VF is also working to preserve its financial liquidity during the coming months, in order to maximize flexibility in spending on its business operations.
As a “proactive, precautionary” measure, the company said it is drawing down the remaining $1 billion available through its unsecured revolving credit facility. And, in “an abundance of caution” as well as a desire to position itself most advantageously when then market emerges from the pandemic, VF is looking into options to enhance liquidity and flexibility.
Following the draw down, VF has about $2.4 billion in cash on hand, the statement said.
Revolving Credit Facility: As a proactive, precautionary measure, VF will draw down the remaining $1 billion available under its current senior unsecured revolving credit facility. Moreover, in an abundance of caution and to best position VF to capitalize on opportunities as it emerges from the COVID-19 pandemic, VF is exploring alternatives to further enhance financial liquidity and flexibility of its capital structure. Following this draw down, VF currently has approximately $2.4 billion of cash on hand.
“Throughout VF’s storied 120-year history, we’ve weathered many storms, and each time we’ve emerged as a stronger company with a renewed sense of focus and determination,” Rendle said.
“The full breadth of actions we’re taking in response to the COVID-19 situation are intended to not only address the challenges of today, but also to position our brands and businesses to thrive in the years ahead as we build on VF’s proud legacy.”
Companies across the sector are reading the tea leaves in an attempt to chart a path forward, but some are freeing up capital in their businesses at the expense of employees.
On Tuesday, PVH Corporation announced that 75 percent of the company’s North American workforce– including office, warehouse and store employees– would be furloughed or see their hours slashed.
Furloughed employees will not receive pay, the company said in a statement, while staff with reduced hours will have their pay reduced proportionally.
Any remaining full-time associates will be subject to a temporary 5-20 percent cut in pay, depending on salary level.
PVH said it would cover all associates’ shares of medical benefit costs throughout the time period, regardless of situation.
“We are doing everything in our power to best position PVH for long-term stability, while considering the impacts to all of our key stakeholders,” Manny Chirico, the company’s chairman and CEO, said in a statement. “We have been forced to take proactive steps to reduce our expenditures and preserve our cash position.”
“While this is requiring difficult short-term decisions, we are confident that our actions will lead us to a stronger future,” he added.
Chirico has elected to forgo his salary while the crisis is ongoing, and around 250 senior leaders and executives across the organization will see salary cuts of up to 50 percent. The company’s Board of Directors will also see their compensation suspended.
Despite the fact that most of the company’s stores in Asia have re-opened with limited hours and thus reduced traffic, PVH said it was implementing temporary salary reductions for all office associates across the region.
Almost all stores remain closed in Europe, and office employees are working from home. Government relief packages like salary subsidiaries are being used to retain employees and offset payroll expenses, the company said.
The Australian government has mandated the closure of all stores and corporate offices, and nearly all of PVH’s employees in the country have been furloughed. Stores are also shuttered in Brazil, where the government is currently enacting legislation that will help mitigate the cost of retaining employees, PVH said. It is currently weighing its options and considering reductions in working hours and salaries for its employees there.