National stores furloughing employees

NEW YORK — Macy’s, Kohl’s and Gap Inc. all said Monday they will stop paying tens of thousands of employees who were thrown out of work when the chains temporarily closed their stores and sales collapsed as a result of the pandemic.

Macy’s said the majority of its 125,000 employees will be furloughed this week and that it is transitioning to an “absolute minimum workforce” needed to maintain basic operations. Macy’s said it has lost the bulk of its sales due to the temporarily closing of more than 600 stores starting March 18.

Kohl’s, based in Menomonee Falls, Wisconsin, said that the furloughs will apply to 85,000 of its 120,000 employees at stores and distribution centers. It will continue to ship products and do curbside pickup from most stores with a limited number of staff.

Gap’s spokesman Sandy Goldberg said the furloughs affect nearly 80,000 out of 129,000 employees across all brands, including Banana Republic and Old Navy.

The furloughed workers will continue to collect health benefits.

Nordstrom said last week it was furloughing a portion of its corporate staff. And shoe company Designer Brands Inc., which operates DSW Designer Shoe Warehouse, furloughed 80% of its workers, effective this past weekend.

The furlough of workers will have negative consequences for an economy in which the retail industry supports one out of four workers.

“This could push us further into a damaging recession that will last longer than the duration of the crisis,” said Neil Saunders, managing director of GlobalData Retail.

More than 190,000 stores, including J.C. Penney and Neiman Marcus, have temporarily closed, accounting for nearly 50% of the U.S. retail square footage, according to Saunders. Discounters, grocers and wholesale clubs that sell essential items like groceries remain open, although they have their own challenges of keeping up with shoppers who continue to stockpile canned goods, paper towels and other staples.

When announcing the temporary closures, most retailers said they would keep paying their workers but they were looking at a two-week timetable. That moment has now passed and the furloughs have become increasingly necessary as the coronavirus rapidly spreads.

The big question is how much of these furloughs will lead to permanent layoffs. Rent the Runway, a pioneer in fashion rental, confirmed earlier Monday, that it was laying off its retail store staff and said it may not be able to reopen its stores that temporarily shuttered earlier this month. Its online subscription service still continues to operate.

Swedish retailer H&M said earlier this month that it may be forced to permanently layoff some its employees after temporarily shuttering 3,441 of its 5,062 stores globally.