URBN, which operates Anthropologie and Urban Outfitters, is taking additional measures to protect its financial position amid the Covid-19 outbreak, including borrowing $220m (£177m) to help protect its cash reserves.
Since 14 March, the group has staggered the closures of all of its stores. The company said it has provided ongoing pay and benefits to all store and home office employees impacted by the temporary closures.
Although digital business continues to operate during the coronavirus pandemic, the retailer has said store closures and lower overall demand require a smaller workforce to support the business. As a result, URBN is furloughing a substantial number of store, wholesale and home office employees for 60 days beginning 1 April.
Impacted employees will continue to receive enrolled benefits during the furlough period.
The company is now taking additional measures to protect its financial position and increase financial flexibility during the challenging time period. These include:
- Suspending hiring, eliminating bonuses for the 2021 financial year and delaying all merit raises,
- Borrowing $220m (£177m) to further protect cash reserves,
- Reducing capital budget by over $100m (£81m) by delaying or cancelling projects,
- Adjusting inventory levels by cancelling or delaying many orders and ask for price concessions on those remaining,
- Suspending the payment of rent temporarily and delaying or cancelling some planned new store openings,
- Reducing all non-payroll expenses, including creative, marketing, and travel,
- Extending payment terms for both merchandise and non-merchandise vendor invoices,
- Reducing investments in growth initiatives such as Nuuly (fashion brand) and expansion into China,
- And finally, reducing senior leadership compensation for the duration of the furlough time period, eliminating directors’ cash compensation for the remainder of financial 2021 year and suspending stock buybacks for the foreseeable future.
“This is the first time in our 50-year history we have furloughed employees. It’s a painful decision that we do reluctantly,” said Richard Hayne, chief executive at URBN.
“We understand the above measures are extreme, but they are unavoidable. While our company is strong and our long-term future is bright, we must take these proactive steps now to ensure the greatest degree of financial flexibility to best protect our employees, customers and shareholders.”