As coronavirus-related store closures continue, Kohl’s is making the difficult decision to temporarily furlough some employees.
The Menomonee Falls, Wis.-based retailer announced today that it is extending its temporary store closures “until further notice.” Amid these closures, Kohl’s is furloughing store and store distribution center associates, as well as some corporate office employees “whose work has been significantly reduced by the store closures.” The company will continue to provide existing health benefits to workers who have been furloughed.
“It is an incredibly difficult decision to extend our store closures and temporarily furlough some of our associates,” said CEO Michelle Gass, who will forfeit her own salary during the coronavirus pandemic. “We look forward to the day that we can reopen our stores to welcome our associates back and serve the millions of families across the country that shop [at] Kohl’s.”
As stores remain shut, Kohl’s is taking a series of steps to create financial liquidity. The retailer is fully drawing down its $1 billion revolving credit facility, decreasing capital expenditures by about $500 million and “significantly” reducing expenses across its marketing, technology and operations divisions while stores remain shut. The department store is additionally temporarily suspending share repurchases and evaluating its dividend program.
Kohl’s has faced recent challenges as it executes a turnaround plan that has been slow to yield the desired results. An Amazon partnership — through which customers can return products purchased on Amazon.com at Kohl’s stores — has been a part of this strategy. Additionally, Kohl’s is carrying products from smaller, niche labels at 50 of its 1,200 stores through the Curated by Kohl’s program, which rolled out in mid-October. It has also continued to expand its footprint of smaller-format stores, which are roughly 35,000 square feet and occupy 60% less space and inventory than a standard Kohl’s store.
The results of these efforts have so far been uneven: The department store has recently seen declining sales in its women’s category and higher costs due to brand launches. In February, the retailer confirmed that it was eliminating 250 jobs. It also announced changes to other positions in its corporate offices as part of its restructuring efforts. The company said it would not be shuttering any stores as part of these layoffs.
Earlier this month, however, the retailer delivered a better-than-expected earnings report for the fourth quarter of 2019. The company recorded adjusted earnings per share of $1.99, beating consensus bets of $1.88, on profits of $265 million. Revenues for the same period ended Feb. 1 rose 4.5% to $6.83 billion, besting expectations of $6.52 billion, while same-store sales were flat compared with a forecast drop of 0.1%.