Designer Brands Inc. has been forced to make some difficult decisions amid the coronavirus crisis.
The DSW parent is placing 80% of its workforce on unpaid leave effective March 29, it revealed in a Securities and Exchange Commission filing yesterday. While on furlough, employees will continue to receive benefits including medical, dental and prescriptions.
For nearly all employees not placed on leave, DBI is implementing pay reductions, with base pay for executive officers to be slashed by 20% and cash retainers for non-employee directors on its board to be reduced by 20%. New hires and all merit increases have also been frozen. As of March 2019, the company employed 16,100 people.
Although the retailer’s stores across North America are temporarily shut, it continues to operate its e-commerce business, distribution centers, and IT centers, it said in its filing.
Watch on FN
Due to the uncertainty created by the coronavirus, DBI has decided not to provide an outlook for the 2020 fiscal year. For the 2019 fiscal year, it recorded adjusted earnings per share of $1.53 on profits of $114.3 million. Revenues advanced 9.9% to $3.49 billion; comps improved by 0.8%, compared with last year’s 6.1% increase.
As the coronavirus pandemic hits retail and other sectors hard, nearly 3.3 million Americans filed jobless claims on a seasonably adjusted basis last week — the highest number in history. A week prior saw a total of 281,000 new claims on a seasonably adjusted basis, already the highest level recorded since 2017.
DBI is not alone in furloughing staff as retailers adjust to a challenging retail climate. Nordstrom announced yesterday that it would furlough an unspecified number of corporate employees “to respond to the challenges” created by the coronavirus. Meanwhile, fast-fashion giant H&M has indicated that it may have to permanently shutter stores and lay off tens of thousands of workers as it suffers revenue setbacks caused by the public-health crisis.
