Genesco Inc., the parent of Journeys, announced additional proactive steps in its efforts to significantly reduce expense, capital and inventory levels to mitigate the negative financial and operational impacts of COVID-19 and improve liquidity.
Among the measures:
- Announced it had furloughed employees and reduced headcount in its middle Tennessee area corporate offices, call centers and distribution centers. Furloughed employees will continue to receive company-offered health care benefits, and Genesco will pay both employee and company premiums. Combined with the store and other furloughs already announced, the company has reduced its workforce by 90 percent. In addition, more highly compensated employees will have their pay reduced based on a graduated scale and certain employee benefits, including 401(k) matching, will be temporarily suspended.
- The company’s U.K.-based Schuh business has announced that effective April 3, 2020, it has reopened its e-commerce operations in compliance with government health and safety practices.
The actions previously announced, include:
- On March 27, 2020, Genesco announced that its 1,480 North American and U.K. stores, after being closed earlier in March, would remain closed until it can safely reopen for employees and customers. Genesco continues to serve its customers online at journeys.com, journeyskidz.com, journeys.ca, littleburgundyshoes.com, schuh.co.uk, johnstonmurphy.com and johnstonmurphy.ca.
- Genesco also announced, at that time, that it implemented furloughs for 3,000 full-time store employees in North America and 3,500 stores, corporate office, and distribution center employees in the U.K.
- Also last week, effective April 1, 2020, Genesco President and Chief Executive Officer Mimi E. Vaughn, and a number of her direct reports, will receive no salary beyond benefits, and the remainder of the senior management team will receive a 50 percent reduction in salary.
- Executive Chairman Robert J. Dennis will not receive a salary, and the board of directors will also forego their cash compensation in support of the company’s cost-cutting efforts.
- The company previously disclosed, in its most recent 10-K filing, that it had borrowed $184.3 million as a precautionary measure to ensure funds are available to meet its obligations for a substantial period of time. The company’s total remaining liquidity on its U.S. credit facility is $50 million. U.K.-based Schuh has borrowed £19 million under its revolving credit agreement, as previously disclosed. The company’s cash and investments on hand totaled approximately $214 million and £17 million, inclusive of these borrowings.
- As a result of these and other cost reduction actions, including those relating to real estate and supply chain, the company believes its cash reserves are sufficient to meet its needs, even if stores remain closed for several months.
“These are extraordinary times for our company and the markets in which we operate. We have had to make very difficult decisions in response to this crisis, the ones relating to our passionate and outstanding people, who are the driving force behind our businesses, were the most difficult of them all,” said Mimi E. Vaughn, Genesco President and Chief Executive Officer. “Genesco has a long history of navigating through difficult times and the measures we are taking will protect the company and position us well to emerge from this crisis. We have exceptional brands and retail businesses with strong strategic positioning, and we look forward to welcoming our employees and customers back in our stores as soon as we can safely return.”
Photo courtesy Genesco