Dive Brief:

• Macy's on Wednesday effectively hit pause on several elements of its recently announced "Polaris" turnaround plans​ saying that the COVID-19 outbreak in the U.S. "is taking a heavy toll on our business and the industry as a whole."

• CEO Jeff Gennette will forgo compensation as the department store "intends to reduce pay for all levels of management Director level and above, effective April 1 and lasting for the duration of the crisis," according to a company statement.

• The retailer also said that it will suspend its quarterly dividend, defer capital spending and draw down its credit facility, as well as "freezing both hiring and spending, reducing receipts and extending the terms for payment of all goods and services."

Dive Insight:

Last month, Macy's rebooted turnaround plans with a strategy dubbed "Polaris" that would entail an overhaul of its best-performing full-line stores, an expansion of its off-price Backstage operation and the abandonment of lesser malls in favor of community-style shopping centers for many other locations.

Now, like many other retailers, the company is taking steps to simply hang on. With all Macy's, Bloomingdale's, Bluemercury, Macy's Backstage, Bloomingdales The Outlet and Market by Macy's locations shuttered until at least the end of the month, the emphasis is now on maintaining business rather than revamping it. Even before the company temporarily closed its doors, consumers pulled back on their visits to Macy's stores. In the second week of March, Macy's experienced a 35.3% decline in footfall, among the worst measured by foot traffic analytics firm Placer.ai.

Rather than operating under a new "North Star," the retailer is now instead under siege. With Polaris barely started, in February the retailer was hit with a downgrade from S&P Global, then another this week from the ratings agency as fallout from the COVID-19 pandemic worsened. S&P analysts expect temporary closures to be extended.

"The spread of the coronavirus has led to mass store closures and a downshift in consumer spending for discretionary merchandise," S&P analysts wrote in an emailed note, demoting the retailer's outlook to negative. "These headwinds complicate mall-based department store operator Macy's Inc.'s turnaround plan and pressure operating performance, potentially resulting in the need to amend its maximum leverage covenant."

Those analysts said they expect to see revenues and profits at Macy's "decline significantly" ​in the first half of the fiscal year, followed by a "gradual recovery" in the second half. E-commerce, which contributes some 25% of Macy's revenue "could offset some of the major sales deterioration at brick-and-mortar locations." But, while they anticipate a "modest pick-up" by the end of the year, they also expect a recession. With debt levels destined to remain elevated and concerns that Macy's could exceed its maximum leverage covenant in light of weaker profits and higher debt, S&P revised Macy's financial risk profile to "significant" from "intermediate."

All that also prompted S&P analysts to turn their outlook on Macy's to negative, from "stable" just a couple of weeks ago.