Dear colleagues,
I love this company and our incredible people. And I look forward to the day when this crisis is behind us and we can resume our normal lives. However, today’s painful reality is that COVID-19 is taking a heavy toll on our company, and I want to share an important update on the state of the business.
Our digital business and call centers remain open, and I want to thank our colleagues who are working to keep these parts of the business operating. We’ve taken steps to enhance safety in these facilities including staggered schedules, reduction in the number of colleagues in common areas by adjusting breaks and meal hours, and enhanced and more frequent cleaning including hard and heavily trafficked surfaces. And we have taken a ‘no questions, no penalties’ approach to missed shifts for those who choose not to work.
Our stores have been closed since March 17. While we originally hoped to reopen our stores on April 1, that is now highly unlikely. We have no way of knowing how long our stores will remain closed, but we believe it will be at least several weeks before we have a clear line of sight.
Our business model relies heavily on free cash flow. Having lost the majority of our sales with the store closures, we must take unusual measures to conserve cash throughout this crisis. We’ve taken a number of actions to improve our position – suspending the dividend, drawing down our line of credit, freezing both hiring and spending, deferring capital spend, reducing receipts, extending our payment terms, and evaluating all other financing options.
We’ve also taken a number of actions related to compensation in order to lower our cost base.
Directors and above will be taking a reduction in pay effective April 1, 2020 through the duration of this crisis. We will email the details of these changes to impacted colleagues this morning. I will receive no compensation. The Board of Directors will not receive any cash compensation.
We are also deferring payment of the 2019 short term incentives (bonus) and deferring the 2020 merit increases that were scheduled for May. And we are deferring our 401K match until November 2020.
We have been working directly and through our retail associations to push for government Relief to access funds that will improve our position and support our colleagues. As I send this, the government is in the midst of passing a COVID-19 Relief bill. We will need to work through it to assess if and when we will have access to federal funds.
Even with government support, we may need to take additional actions that will directly impact our great colleagues. This would be our last resort. If we do require furloughs or layoffs, it will be in order to ensure the survival of our company. I am committed to being transparent on any decisions we make and will share updates with you as we assess the Relief bill and next steps.
We are resilient. I know we will get through this, as a country and a company. And I look forward to the day we can re-open our stores and welcome our customers back.
In the meantime, my wish is for everyone’s health and safety while we continue to navigate this crisis together.
With respect,