As the coronavirus pandemic continues to drag on retail, Foot Locker has become the latest major shoe player to announce furloughs.
Effective April 26, the company will furlough the “majority” of its store workers in the United States and Canada, along with some store employees in Australia and some supply chain workers in the U.S. During the furlough period, workers will continue to receive scheduled health and other benefits. The furloughs will extend until operations can resume “in accordance with national, state, and local guidance related to the evolving COVID-19 pandemic.”
In addition to furloughing a portion of its staff, Foot Locker is also reducing pay for its executives. CEO Dick Johnson is taking a pay cut of 40% for the second quarter ending Aug. 1. Meanwhile, EVPs and SVPs will see their pay reduced by 20%, with corporate VPs and general manager-level roles seeing their pay decreased 10%. Further, the company’s board of directors will not take cash compensation “until further note.”
Additionally, Foot Locker is taking a number of actions to keep cash flowing amid the “sudden reduction in sales” caused by coronavirus-induced closures. The company has temporarily suspended its share repurchase program and is cutting capital expenditures by 50% for the fiscal year ending Jan. 30, 2021.
Speaking as part of FN’s “Leading in a Crisis” webinar series earlier this month, Johnson addressed the difficult choices he and his executives have had to make during the coronavirus crisis — noting that decisions regarding furloughs and layoffs are particularly challenging.
“Everybody’s got a different decision-making matrix that they go through,” Johnson said. “But fundamentally there’s little to no revenue coming in — we’ve asked people to stand down as is relates to going out and being in public places, so I think it’s just part of that decision-making matrix that every company has to go through at some point during this discussion.”
Foot Locker has 3,129 retail stores in 27 countries across North America, Europe, Asia, Australia and New Zealand. As of Feb. 2, 2019, the company and its subsidiaries employed 15,470 full-time staff as well as 33,861 part-time workers.
Similar to Foot Locker, other retailers, such as Macy’s, DSW and Dick’s Sporting Goods, have also chosen to cut executive pay and furlough store workers as doors remain shut due to the coronavirus. Moreover, other companies are also taking steps to preserve liquidity, including cutting expenses, tapping revolving credit lines and deferring payments when possible.