Lululemon keeps workers on payroll
Lululemon athletica inc. is paying its employees even as its stores remain shuttered amid the COVID-19 pandemic.
The athletic apparel retailer said it will continue to pay its employees through June 1, whether stores reopen or remain closed. The move comes as many department store and specialty retailers, from Macy’s to Gap to Bed Bath & Beyond, have furloughed store employees. (Lululemon also has paid all its April rent to landlords, reported CNBC.)
For the next three months, Lululemon’s top executives will take a 20% pay cut, and the board will forgo its cash retainer. The money will go towards Lululemon’s newly-established We Stand Together Fund to help employees facing COVID-19 related hardships.
The new measures are in addition to the previously announced actions at Lululemon, including actively managing the company’s expense structure, capital investment, and store opening and remodel projects. The company has also temporarily paused its share repurchase program.
“At Lululemon, our people are our top priority,” said Calvin McDonald, CEO. “These decisions enable us to support our teams and immediate business priorities, while balancing what is required to plan for the recovery and growth to follow. We’re making the right commitments now as we navigate what’s ahead for the future.”
In the CNBC report, McDonald said that, from a balance sheet perspective, Lululemon is in “very good standing,” ending 2019 with $1.1 billion in cash on hand. He also said company has no plans to draw down its credit revolver, either. This “allows us to not just obsess on the short term,” he said.
McDonald also told CNBC that more people are shopping online because of COVID-19, and those habits are going to stick, calling it the “new reality of retail.”
“It’s which retailers will have the investment to be able to create the initiatives to fully support and take advantage of those behavioral changes ... will be what separates those that are able to weather the storm” from those that aren’t, he said.
For the full CNBC story, click here.