Gap Inc. has taken “precautionary actions” to strengthen financial flexibility in response to the COVID-19 pandemic.
The retailer is reducing capital expenditures by approximately $300 million in fiscal 2020 and reviewing all operating expenses for opportunities to reduce spending, including realigning inventory to expected sales trends.
In addition, Gap Inc. is drawing down the entire $500 million on its revolving credit facility. The company also halted its dividend for the rest of the year and postponed the payment of its previously scheduled first-quarter dividend of 24.25 cents a share. The dividend will be payable "on or after April 28," subject to "the right of the company to further defer the record and payment dates, depending upon, among other factors, the progression of the COVID-19 outbreak," Gap stated.
The company also withdrew its 2020 guidance issued on March 12, and said it is not providing an updated outlook at this time.
"We entered 2020 in a strong financial position,” CEO Sonia Syngal said in a statement. “However, in this time of unprecedented disruption to the retail sector, we are proactively taking the prudent actions to further strengthen our financial liquidity and flexibility.