For the second half of March, all department stores under the red, star-shaped Macy’s, Inc. umbrella, have been shuttered due to the ongoing COVID-19 crisis. While online shopping is still available for consumers, closing down the almost 870 physical locations of Macy’s properties has hit the business hard.
In a statement today, Macy’s, Inc. announced that, even after taking measures to remain financially flexible such as freezing hiring, spending and capital spend, reducing receipts and canceling some orders, the company will put the majority of its workforce—which comprises 125,000 employees—on furlough beginning this week.
The mega retailer confirmed that the outbreak has taken a “heavy toll” on business and said it has lost the majority of its sales amid COVID-19 closures. But the emergence of the global coronavirus pandemic within U.S. borders was not the start of Macy’s, Inc.’s monetary woes.
By the end of the third quarter, Macy’s had about $300 million in cash compared with nearly $1.2 billion for the same period a year prior. As of August 2019, Macy’s was $4.69 billion in debt.
At the beginning of February, the department store behemoth announced that in an effort to cut costs and optimize retail resources, it would close 125 underperforming stores over the next three years, eliminating 2,000 jobs.
Macy’s was set to lose another $1.4 billion in revenue from those closures.
Now, across the Macy’s, Bloomingdales and Bluemercury brands, the “absolute minimum workforce needed to maintain basic operations” will continue working. Furloughed employees who are enrolled in company-funded health benefits will continue to receive coverage “at least through May,” returning to their posts on a staggered basis once the country is given the green light to resume business.
Two weeks ago, the Retail, Wholesale and Department Store Union negotiated provisions that expire on April 1 for members who are employed by Macy’s, Inc. and covered under a collective bargaining agreement.
Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, issued a statement in response to the furlough, saying, “Macy’s needs to do much more for its employees than what they have announced so far—and we are pushing them to do that. They will be judged in the future by how they treat their employees now.”
Macy’s, Inc. said it is currently exploring other financing options.