As the COVID-19 outbreak’s impact is spreading, additional retailers are sharing their plans to survive the mass store closures required by social distancing. H&M is considering tens of thousands of temporary layoffs, with the potential for some to become permanent; GameStop has shut down all U.S. locations while offering compensation to impacted workers; and Nordstrom is looking to cut costs and draw on credit to keep its cash reserves intact.
H&M’s closure of 3,441 of its 5,062 stores across the globe showcases the worldwide impact of the coronavirus: the shutdowns include all stores in the U.S., Germany and the UK, which are three of the retailer’s biggest markets. E-Commerce operations are operational in all of H&M’s markets, but the company reported low demand in countries where its stores are still open, which resulted in reduced sales for the first half of March.
As a result, H&M is reviewing its options in terms of buying, investments, rents and staffing, as well as other areas. The discussions include temporary layoffs of tens of thousands of employees in all parts of the business, as well a potentially permanent layoffs for a smaller number of employees.
“We are doing everything in our power in the H&M group to manage the situation related to the coronavirus,” said Helena Helmersson, CEO of H&M in a statement. “My hope is that we will be able to get operations up and running again as soon as possible and welcome back all our customers in all our 74 store markets. This is an extraordinary situation in which we are forced to make difficult decisions, but with every challenge there are also opportunities and I am convinced that we as a company — once we have made it through this — will continue to stand strong.”
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GameStop had allegedly declared itself “essential retail” in a memo seen by Kokatu, which led to criticism over the company’s refusal to close its stores, but the retailer has since changed course and shuttered all locations on March 22. GameStop will still offer curbside pickup, but will otherwise operate entirely online.
Additionally, GameStop will pay all U.S. employees whose hours have been eliminated an additional two weeks at their regular pay rate, based on their average hours worked in the last 10 weeks. Associates also have been assured that they do not have to work if they do not feel comfortable doing so.
“Our priority has been and continues to be on the well-being of our employees, customers and business partners,” said George Sherman, CEO of GameStop in a statement. “We have been steadfast in our adherence to CDC-guided safety and local government orders for retailers in each of our communities. As millions of Americans look to GameStop to adjust to their new normal of increased time at home, for work, learning and play, we have implemented practices to help ensure the safety and health of our employees, customers and partners.”
Nordstrom is taking a financial approach to steel itself against declining revenue by drawing down $800 million on its revolving line of credit; targeting $500 million in reduced operational expenses on top of the planned $200 million to $250 million in savings; and suspending its quarterly cash dividend for Q2. The retailer also has suffered from store closures, but noted that efforts to increase customer demand and clear excess inventory online have helped offset some of the losses.
