Coronavirus Fallout: Victoria’s Secret, TJX Close Online Stores; Tailored Brands Shutters Distribution Center

  • March 19, 2020 at 4:54 PM EDT
  • By Glenn Taylor
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While stores and shopping centers have been closing throughout the U.S. over the past week due to the coronavirus (COVID-19) pandemic, it appears the outbreak is starting to negatively impact the channel that shoppers are growing increasingly reliant on: e-Commerce. For different reasons, shoppers at Victoria’s Secret and Tailored Brands won’t get their online orders until the end of March at the earliest. TJX also closing its online businesses for TJ Maxx, Marshalls and Sierra, as well as its stores, distribution and fulfillment centers, until further notice.

L Brands is closing its Victoria’s Secret and PINK online stores, suspending all new e-Commerce orders through March 29, 2020, while the Bath & Body Works e-Commerce business will continue to operate with prioritization on soaps and hand sanitizers. All L Brands businesses are fulfilled by a third party whose “ability to continue to perform these services may be affected by developing circumstances,” the company said in an SEC filing.

L Brands employees will continue to receive pay and benefits during the temporary closure period. To cover expenses, L Brands is drawing upon $950 million of a $1 billion secured credit loan.

Tailored Brands, parent company of Men’s Wearhouse, Jos. A. Bank and Moores Clothing, is closing its distribution center from March 20 until at least March 28. Customers can continue to place orders online during the closure so that they can be shipped after the distribution center reopens. All employees will be paid for scheduled hours throughout this time.

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The e-Commerce trip-ups don’t exactly come at a great time for either company. Both have had significant financial problems exacerbated by debt in recent years, making them likely candidates for bankruptcy. S&P Global Market Intelligence lists L Brands at fourth and Tailored Brands at seventh as the most vulnerable public U.S. department store and apparel companies, with L Brands having a 13% chance of defaulting in the next two years, while Tailored Brands has a 12.6% chance.

Unlike L Brands and Tailored Brands, TJX has operated on solid footing in recent years, and can handle an e-Commerce outage given that online sales percentage of total sales remains in the low-single digits across its brands. Marshalls didn’t even debut its e-Commerce site until September 2019. And conversely to many department stores and specialty apparel retailers that have had difficulty with slower foot traffic and sales, leading many to wonder how long they can handle store closures, TJ Maxx and Marshalls have never had those issues, suggesting that they’ll be back to business as usual once stores open.

TJX plans to pay its store, distribution center and office associates for two weeks during these closures. To maintain financial liquidity and flexibility, the company is drawing upon a $1 billion credit loan, suspending its share buyback program and reducing capital expenditures.

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