With its stores temporarily closed, Urban Outfitters said it will suspend the payment of rent temporarily and delay or cancel some planned new store openings.
In announcing its decision to suspend payments, Urban Outfitters joins The Cheesecake Factory, the only other national chain that has gone public with plans to do so. In addition, Urban Outfitters detailed a list of other measures is it taking to protect its financial position and increase financial flexibility during the COVID-19 crisis, including adjusting inventory levels by canceling or delaying many orders and asking for price concessions on those remaining.
Urban Outfitters also is furloughing a substantial number of store, wholesale and home office employees for 60 days beginning April 1. Impacted employees will continue to receive enrolled benefits during the furlough period.
Here are other actions the chain is taking:
• Suspending hiring, eliminate bonuses for FY’21 and delaying all merit raises;
• Borrowing $220 million to further protect cash reserves;
• Reducing its capital budget by over $100 million by delaying or cancelling projects;
• Reducing all non-payroll expenses, including creative, marketing, and travel to name a few;
• Extending payment terms for both merchandise and non-merchandise vendor invoices;
• Reducing investments in its growth initiatives such as Nuuly and expansion into China;
• And reducing senior leadership compensation for the duration of the furlough time period, eliminating directors’ cash compensation for the remainder of FY’21 and suspend 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 A. Hayne, CEO, Urban Outfitters. “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.”