Burlington Stores to Keep Shut, More on Coronavirus-Mitigation
Burlington Stores, Inc. BURL recently issued updates in light of the rising concerns over the coronavirus pandemic. It said that the company’s stores and distribution centers will continue to remain shut for now. Management has temporarily furloughed majority of associates, however, the impacted workers are entitled to benefits including payment of 100% of the existing health benefit premiums. Also, the company has created a hotline to support furloughed associates to gain access to government programs.
In addition, management has taken steps to reinforce the company’s financial position during such unprecedented times. The company’s CEO will forgo salary and the board will forfeit cash compensation whereas its executive leadership team has voluntarily chosen to reduce their salary by 50%. Moreover, finalization of yearly incentive bonus payments with respect to fiscal 2019 and merit pay raises for fiscal 2020 have been deferred to later in the fiscal.
The company had also withdrawn first quarter and fiscal 2020 outlook on increasing volatility stemming from the pandemic. Moreover, it has put its share buy-back program on hold for the time being. Management also informed that the company has been cutting down on capital spending and operating costs as well as reducing inventory receipts and managing working capital effectively. We note that the company began fiscal 2020 with roughly $400 million in cash. It had also borrowed $400 million under its $600-million ABL facility to raise liquidity.
The Burlington, NJ-based company’s shares have lost 25.9%, wider than the industry’s 9.5% fall in the past three months. Burlington Stores currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Retailers’ Actions
The coronavirus has claimed lives and disrupted economic activities worldwide. Like many other sectors, the retail space is badly hit. Supply-chain bottlenecks along with trimmed work hours and store closures to contain the spread of the virus and many such precautionary measures are likely to hurt companies’ performance.
Retailers are now looking to stay financially resilient. L Brands LB, Macy’s (M) and Tilly's TLYS, to name a few, have taken measures toward the same. Women’s apparel retailer, L Brands suspended quarterly dividend, cut down on capital expenditure and drew $950 million from the revolving credit facility. It has also temporarily reduced base compensation by 20% for senior vice presidents, deferred annual merit increases and furloughed majority of store associates effective Apr 5, till further notice.
Renowned omni-channel retailer, Macy’s has suspended second-quarter fiscal 2020 dividend and lowered capital expenditures for the current fiscal year. The company has also chosen to access the $1.5 billion available under the revolving credit facility. Apparel and accessories dealer, Tilly's has borrowed $23.7 million under its credit facility, shut down the distribution center in Irvine, CA, and furloughed most associates. It has also recognized additional cost reductions for fiscal 2020.
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