As the coronavirus crisis continues, Capri Holdings Ltd. has become the latest company to furlough retail workers and cut executive salaries.
The parent to Jimmy Choo, Michael Kors and Versace today announced that it will furlough its entire North American retail staff of roughly 7,000 workers beginning on April 11. Furloughed workers will continue to receive scheduled benefits. The company’s stores in North America and Europe have been closed since March 18; it had initially planned to reopen outposts on April 10 but now expects closures to continue through about June 1.
While Capri hopes to return “as many retail employees as possible to work in the second half of the fiscal year,” it expects it will require a reduced workforce after the coronavirus siege subsides.
“This is a very challenging time for our business. We are diligently working to address this unprecedented situation by taking measures to protect our employees and maintain the company’s financial flexibility. We do not take any of these measures lightly, particularly with respect to our employees who are the heart and soul of our company,” said John Idol, chairman and CEO of Capri Holdings. “We believe that these actions are necessary to enable us to overcome the burdens of this financial crisis. We continue to believe in the power of our three fashion luxury brands and the resiliency of our company to navigate these extraordinary times.”
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For the 2021 fiscal year, Idol will be forfeiting his salary, along with Michael Kors’ namesake founder and chief creative officer Michael Kors, Versace chief creative officer Donatella Versace and Jimmy Choo chief creative officer Sandra Choi. The Capri board of directors will see their cash pay reduced by 50%. Additionally, the company is “exploring” opportunities to reduce salaries for other employees by about 20%, and it anticipates reducing its corporate workforce in the future.
Capri is planning to “significantly” decrease capital expenditures for the 2021 fiscal year and is reducing marketing spend as well as delaying or canceling some new store openings. Additionally, the company has drawn the remaining $300 million available under its revolving credit line, with a total of $900 million in cash and cash equivalents as of April 1.
“Given our size and scale, we believe that Capri is well-positioned to continue to operate its business despite this unprecedented situation. We have a strong balance sheet and will continue to take disciplined actions to preserve our cash and liquidity,” said Idol.
As coronavirus-induced store closures extend, other fashion and footwear companies, such as Macy’s, Nordstrom and Steve Madden Ltd., have also chosen to furlough retail workers. In the case of those three retailers, top executives are forfeiting their salaries for the time being. Like Capri, many companies are tapping into revolving lines of credit to maintain cash flow while stores are shut.
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