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Nobody wants things to get back to normal more than big retailers. Well, maybe those of us stuck in NYC apartments. But after POTUS announced over the weekend that he expects shutdowns through at least April 30, big changes had to be made.

Macy’s, Kohl’s, Gap, Neiman Marcus, and other retailers all announced that they are furloughing just about all of their respective employees at brick and mortar locations and HQ. Yes, even you, Karen. In total, 300k+ employees will have their paychecks temporarily suspended.

Furlough, BTW, means that employees are forced to take unpaid absences but they are technically still employed. It is a temporary situation, though no timeframe needs to be given to said "employees." Seems fair...

Desperate times

Macy’s is the biggest name out of the bunch to tell employees to stay home on their own dime, but not before the retailer tried other measures to stay afloat. The company initially suspended its dividend, canceled orders, and reduced executive pay when it thought that stores could be reopened by April 1st. What a cruel April Fools joke that turned out to be.

While the retailer won’t be paying employees, it at least plans to cover health insurance and pay premiums through May. Macy’s has an e-commerce business that will require some staff to stay on board.

Macy’s stock closed down roughly 3% on the day.

The bottom line...

Employee costs can account for up to 70% of companies' operating expenses, so going all Donny Politics-in-the-last-30-seconds-of-an-episode-of -'The Apprentice' is usually the fastest way to trim the fat. Analysts estimate that Macy’s and Kohl’s have five months' worth of cash on hand. No pressure.

So, what happens after that?

Well, if the US remains shut down for the foreseeable future (spoiler: it will), there’s a chance that public companies could seek private equity investments... for pennies on the dollar, of course. While the public is struggling, reports show that PE firms are flush with cash, waiting to pounce on struggling industries. Barbarians, meet the gate.

Macy’s, Gap to Furlough Most Workers as Coronavirus Crisis Keeps Stores Closed [WSJ]

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