TJX to furlough employees and cut executive pay

Even off-price retail chains, which have long been a sweet spot for retail even in the midst of a recession, are feeling the impact of COVID-19. TJX, the parent company of TJ Maxx and Marshalls, will be furloughing employees and cutting executive pay by 20 to 30 percent until further notice. Beginning April 12, the majority of in-store and distribution center associates in North America will be furloughed. TJX hasn't revealed a specific figure of how many employees will be affected by this, but in total the company employs 270,000 people.

“TJX is a great company with a great retail model," said TJX president and CEO Ernie Herman in a statement. "I want to reiterate that TJX entered 2020 in a very strong financial position. We consider the actions that we announced today as just prudent steps we are taking to further strengthen our financial liquidity and flexibility during this uncertain environment. Additionally, while we are evaluating our dividend in the near term, I want to emphasize that we remain committed to paying our dividends whenever the environment normalizes for the long term, as we have been for decades. With a 43-year history as a company, our management team and amazing organization are focused on managing through these unprecedented times for the long-term success of our company.”

TJX will still be paying for furloughed employees health insurance this time. Herrman himself will be among the executives taking a 30 percent pay cut. TJX was one of the last companies to close all of its stores due to coronavirus, with doors shutting on March 19. They also closed all of their e-commerce sites, as they can't make deliveries with distribution warehouses closed.

To help ameliorate its temporary financial strain, TJX has drawn down 1 billion dollars from its revolving credit facility, suspended the share repurchase program and reduced capital spending. TJX can expect a very slow quarter with closed stores, but prior to that they had seen 24 consecutive quarters of growth. With a recession here, TJX can expect their off-price stores will be some of the few better positioned for a turnaround once stores are able to reopen.

photo: via TJ Maxx Facebook Page