Macy's (NYSE: M) made the decision to furlough the majority of its employees in light of declining sales due to widespread temporary store closings amid the COVID-19 pandemic. Early in March, Macy's began closing all of its 775 stores in large part since many state governments have legally mandated that nonessential businesses close in order to support social distancing measures.
The company decided to move to "the absolute minimum workforce needed to maintain basic operations," resulting in the decision to furlough the majority of its 125,000 employees. The roughly 80,000 workers being furloughed will still be eligible for their employer-funded healthcare plans at least until the end of May.
"We expect to bring colleagues back on a staggered basis as business resumes," said the company. When in fact business will be able to pick up again is currently unknown so far given the circumstances. "The COVID-19 outbreak continues to take a heavy toll on Macy's, Inc. business," the company said in a statement.
While Macy's websites are still open for business, that may not be enough for the company to maintain themselves sufficiently in the long-term, considering they've already been struggling for some time in light of heavy competition from stores like Target (NYSE: TGT) and Walmart (NYSE: WMT). Plus the vast majority of Macy's sales come from their brick-and-mortar store operations, with only one-fifth of total revenue being generated from online sales.
This decision to furlough comes after the company already suspended its quarterly dividend payments, tapped into more of its $1.5 million credit line, and froze all hiring. "While these actions have helped," Macy's said, "it is not enough."
Many other retailers are similarly furloughing their workers during the nonessential business store closures, including Kohl's (NYSE: KSS) and Gap (NYSE: GPS). Nordstorm (NYSE: JWN) is furloughing some of its corporate staff.
Analysts are concerned that since the retail industry accounts for so much of the American workforce, these furloughs will have lasting impacts on the economy. According to Neil Saunders, managing director of GlobalData Retail, "This could push us further into a damaging recession that will last longer than the duration of the crisis."
Nearly twenty years ago, the number of retail workers surpassed those working in manufacturing, which previously was the nation's largest employment industry. One in ten workers are retail employees in the U.S., accounting for 16 million workers as of 2017.