Foot Locker Inc. said in a regulatory filing that in response to temporary store closures and other business disruptions resulting from COVID-19 pandemic, it will furlough the majority of the company’s store employees in the U.S. and Canada.
The furloughs were communicated to employees on April 21. Also furloughed were certain of its store employees in Australia and supply chain employees in the U.S. The furlough period will begin on April 26.
Foot Locker said it is continuing to provide its furloughed employees with wages and salaries until the effective date of the furlough period. Subject to local regulations, these employees will be eligible for unemployment benefits. Employees subject to the furlough program will also continue to receive their currently-enrolled health and other benefits.
Foot Locker said, “The company’s retail store closures and employee furlough period is uncertain at this time and will continue until operations can safely and responsibly resume in accordance with national, state, and local guidance related to the evolving COVID-19 pandemic.”
On March 17, Foot Locker said it would close stores across North America, EMEA (Europe, Middle East and Asia) and Malaysia from March 17 through March 31 and that timeframe has since been extended.
Foot Locker also said in the filing on April 22 that in conjunction with the company’s executive salary reduction measures, effective May 3, 2020, the company’s Board of Directors have suspended the cash elements of their director compensation until further notice.
In addition, due to the unprecedented business impact of the widespread COVID-19 pandemic, the company is implementing a variety of actions to address the “sudden reduction” in sales, including temporarily suspending its share repurchase program, and reducing capital expenditures by 50 percent, for the fiscal year ended January 30, 2021, to increase its cash position and provide additional flexibility.
On March 23, the retailer had said it borrowed $330 million under its revolving credit facility. The retailer said the borrowings were made as a precautionary measure to increase its cash position and preserve financial flexibility in light of the uncertainty in the global markets resulting from the pandemic.
Photo courtesy FootLocker