Beginning Wednesday, JCPenney will join most of its retail peers when the company furloughs a majority of its employees to offset the economic hit of the COVID-19 pandemic.
Beginning Wednesday, JCPenney will furlough most of its hourly associates, according to the Dallas Business Journal. On Sunday, April 5, the company will also furlough a "significant portion" of employees at its Plano, Texas, headquarters and at corporate offices in Salt Lake City and New York, as well as its salaried store associates. The company furloughs will affect most of JCPenney's 95,000 employees. Employees who have been furloughed will continue to receive scheduled health benefits.
In the release, JCPenney noted that “it anticipates gradually reopening stores and offices in markets when it is safe to do so,” though no specific date was stipulated.
“We remain optimistic about JCPenney’s ability to weather this pandemic. We also believe these short-term solutions will have a long-term benefit for our associates, customers, and key stakeholders as we look forward to the day that we reopen our doors,” company CEO Jill Soltau said in a prepared statement.
The company said “many” of its associates in supply chain and logistics centers were furloughed March 20 and that “those furloughs will continue,” according to the release.
Other popular retailers including Macy’s, Gap, Nordstrom and Kohl’s have elected to implement similar employment control measures to mitigate the ongoing slump in sales due to shopping malls closing their doors and shoppers staying home to avoid the spread of coronavirus.
The furloughs denote just how significant the impact of coronavirus has been because the retail industry supports one in four workers in the U.S. economy, according to the Los Angeles Times. Many of those workers will be eligible for receiving elevated unemployment benefits as a part of the recent $2 trillion rescue package passed by Congress and signed by President Donald Trump. However, the funds won't be a permanent solution.
The employees have their own cash flow concerns, but the retailers will also face the buckling under the weight of the widespread virus. Department stores have enough cash to make it to about five to eight months with their stores temporarily closed, according to Cowen & Co., in a report obtained by the Times. Macy’s and Kohl’s have enough for five months, Cowen said. JC Penney and Nordstrom are better positioned, at eight months of available liquidity, according to Cowen’s report.
The virus could continue to persist well into the summer, according to White House Coronavirus Task Force member Dr. Deborah Birx. The president has said the rescue package will be extended if the economic needs continue to be unmet for businesses and individual Americans.