American Eagle Outfitters, Inc. has announced that in response to ongoing store closures due to COVID-19, the company is taking a series of actions to preserve financial strength including a suspension of its share repurchase program and deferred payment of the first quarter cash dividend; temporary furloughs of store, field and corporate associates beginning April 5, largely reflecting the continued uncertainty around the duration of store closures; reductions to operating expense, which include delayed merit increases for associates, a hiring freeze and other cost saving initiatives; cuts to inventory receipts to align with lower demand due to store closures; and reduced capital expenditures across stores, IT and other projects.
“The measures we are taking today are difficult, and we recognize that these decisions significantly impact our associates, yet are unfortunately necessary for our continued long-term success,” said Jay Schottenstein, Executive Chairman of the company’s board and Chief Executive Officer, adding, “This is not business as usual and we are preparing to emerge from this crisis stronger, more nimble and ready to grow.”
The company said, furloughed associates will maintain benefits and AEO will fund 100 percent of the health premiums for eligible employees impacted by these measures, through at least April 2020. AEO Inc. has seeded and set up a program through the AEO Foundation for associates who may be experiencing economic distress caused by a COVID-19 diagnosis. In addition, the company has set up an associate resource center online, which will allow easy access to contacts, benefits information as well as state unemployment resources.
The company added that AEO’s previously declared first quarter fiscal 2020 quarterly cash dividend of 1375 cents will now be payable April 23, 2021 to stockholders of record at the close of business on April 9, 2021. However, it added that the company maintains the right to defer the record and payment dates, depending upon, among other factors, the progression of the COVID-19 outbreak, business performance and the macroeconomic environment.
The company has already announced temporary closure of all AE and Aerie stores across North America, which has extended beyond the initial March 27, 2020 estimate and has drawn down 330 million dollars from its revolving credit facility to bolster liquidity. AEO entered fiscal 2020 with 417 million dollars in cash and short-term investments and no debt.
Picture:Aerie press room