Ulta Beauty, At Home in additional measures to reduce costs; CEOs forgo salaries

Marianne Wilson
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Ulta Beauty and At Home Group have joined the growing list of retailers who are taking additional measures to shore up their finances and reduce expenses as their stores remain closed during the COVID-19 pandemic.

Ulta Beauty said it will furlough many of its store and salon associates, starting April 19. All furloughed associates participating in company benefit plans will remain enrolled in their respective coverages.

In addition, Mary Dillon, CEO of Ulta, will indefinitely forgo her base salary. She also has made a personal donation of $500,000 to the Ulta Beauty Associate Relief Program, which provides grants to associates facing personal hardship. Ulta’s executive team and board will also make personal donations to the program, the company said.

Ulta is also donating 450,000 medical-grade gloves from its in-store salons to hospitals in collaboration with FEMA.

As previously announced, Ulta’s distribution centers remain open to support its e-commerce business. Ulta is providing employees actively working at the centers a $2-per-hour wage premium for their continued commitment. 

Also as previously announced, Ulta is working on an adjusted plan for new store openings, relocations and remodel projects for 2020.

At Home Group
At Home Group is furloughing a portion of its home office, store and distribution center employees, effective Saturday, April 11. (The home goods retailer will fund both the employee and employer portions of health insurance premiums for eligible salaried individuals during the furlough period.) At Home also has eliminated approximately 10% of corporate roles, primarily related to new store development and openings.

The company said that CEO Lee Bird will forgo 100% of his salary for the duration of the furlough.

In other actions, At Home has:
• Reduced compensation for the remaining home office associates, including the executive team, by 10% to 30% depending on salary grade;
•    Implemented a hiring freeze and deferred promotions and merit compensation adjustments for existing employees;
•    Deferred compensation for the board;
•    Pursued the relevant provisions of the CARES Act to help our near-term liquidity profile; and
•    Continued to partner with key constituents, including product partners, vendors and landlords, to preserve liquidity.

The new measures followed a long list of previously announced actions At Home has taken in response to the COVID-19 pandemic. The company has: 
•    Suspended all new store openings and remodeling projects and eliminated all discretionary capital spend except as it relates to omnichannel initiatives. These efforts could reduce annual capital expenditures by over $200 million compared to fiscal 2020 if At Home does not resume new store investment for the remainder of fiscal 2021;
•    Stopped inventory accumulation for unopened stores and deploying any accumulated inventory to existing stores;
•    Trimmed purchase orders for near-term receipts and exercising extreme prudence on new product orders to better align with customer demand;
•    Significantly curtailed advertising spend, consulting projects and non-essential operating expenses;
•    Expedited the expansion of its buy-online-pickup-in-store capabilities to reach over 100 stores in April;
•    Launched curbside pickup at all open stores, subject to local and state mandates;
•    Expanded its partnership with PICKUP, a last-mile logistics service, to offer contactless next-day local delivery of a full assortment of home décor and furniture from 125 stores, subject to local and state mandates;
•    Proactively drew down $55 million on the company’s ABL facility as a precautionary measure, with the capacity to draw more subject to borrowing base availability: and
•    Pursuing additional sources of liquidity to provide increased financial flexibility.