Ross Stores Furloughs Staff to Prevent Spread of Coronavirus

Zacks Equity Research

With the novel coronavirus infecting more than a million people worldwide and leading to several deaths, Ross Stores, Inc. ROST has ramped up precautionary measures to fight the ongoing pandemic. To this end, the company’s Ross Dress for Less and dd’s discounts stores continue to remain shut. These stores are closed since Mar 20 and were expected to reopen by Apr 4.

Due to the extended store closures, Ross Stores has announced to furlough most of its associates working in store and distribution centers along with other associates. This move will be effective from Apr 5 and is valid till operations resume. Moreover, the company has pledged to pay the portion of health premiums for the furloughed employees and provide them with health benefits. Eligible furloughed workers can also claim unemployment benefits.

Apart from these, the company’s CEO and chairman will forgo their salaries, hile the senior executive team will take a major pay cut. Also, board members will waive off their cash retainer.   

Similarly, retailers, including Macy’s M, Buckle BKE and Kohl’s KSS, have put thousands of employees on leave. Notably, Macy’s is furloughing most of its 130,000 workers in the United States, per sources. Kohl’s is likely to grant leave to workers at its stores and distribution centers. Buckle has decided to furlough most of its employees, including store and corporate office workers, starting Apr 5.

Ross Stores has already cut down on expenses and undertaken efforts to strengthen its financial position in the wake of the uncertain impacts of COVID-19. Keeping in these lines, it had earlier withdrawn its top and bottom-line guidance for fiscal 2020 and the first quarter. 

Further, with fading chances of stores reopening anytime soon, management is gearing up to improve liquidity in order to cope up with the challenging times. In this regard, the company suspended its share repurchase program and cut its capital expenditure and other expenses. Also, management has drawn $800 million from its revolving credit facility to add to its cash balance. Further, the company is making efforts to match its inventory as per the recent sales trend. 

In the past three months, shares of this Zacks Rank #4 (Sell) company have slumped 36.3% compared with the industry’s decline of 17.5%. 

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