Urban Outfitters Inc. has made the decision to withhold rent payments as its stores across the country remain closed amid the spread of the novel coronavirus.
In a statement yesterday, the Philadelphia-based retailer — parent to brands including the namesake Urban Outfitters, Anthropologie and Free People — announced that it would not pay rent, on a temporary basis, as well as either delay or cancel some of its planned store openings this year.
“The global spread of COVID-19 is affecting every one of us and is certainly impacting URBN as well,” CEO Richard Hayne said in a statement. “Our efforts as a company have been directed at mitigating the risk to our employees and customers while trying to maintain some business so we can continue to support and pay our workers.”
The company’s stores have been closed to the public since March 14, but it has continued to provide pay and benefits to all store associates impacted by the closures.
Although its digital business is still up and running, the retail firm yesterday noted “lower overall demand” in its business and said it would furlough for 60 days a “substantial number” of remote employees as well as workers across its stores and wholesale operations. (They will retain their benefits during the two-month period.)
According to Hayne, this marks the first time in the company’s 50-year history that it furloughed employees.
What’s more, URBN announced that it would suspend hiring, eliminate bonuses and delay all merit raises, as well as reduce all non-payroll expenses, such as marketing and travel. Senior leaders will also take home reduced pay for the duration of the furlough, while the board of directors will not receive cash compensation for the remainder of the fiscal year.
“It’s a painful decision that we do reluctantly,” Hayne explained. “While our company is strong and our long-term future is bright, we must take these proactive steps now to ensure the greatest degree of financial flexibility to best protect our employees, customers and shareholders.”
To protect its cash reserves, the company borrowed $220 million and cut $100 million from its capital budget by delaying or cancelling projects. The unprecedented COVID-19 health crisis has prompted many other retailers — including Gap and Macy’s — to tap into credit lines to maintain their cash flow and furlough a portion of their workforce.
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