Dive Brief:
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Ross on Thursday said the ongoing COVID-19 pandemic prevents it from reopening stores April 4 as planned, prompting the furlough of most store and distribution center employees, as well as some others. Ross did not immediately respond to Retail Dive's request for comment regarding the number of affected employees.
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The furlough begins April 5 and will last "until operations can resume in their areas," according to a company press release. Those furloughed remain Ross associates, with no change to health benefits, except that Ross will pick up the employee portion of premiums. Furloughed workers will be eligible to apply for unemployment benefits.
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Ross Stores' furlough follows previous efforts to shore up finances and protect employees. Last month, the company withdrew its guidance, suspended stock repurchases, cut expenses and inventory, and drew down $800 million under its revolving credit facility, then shuttered stores temporarily but continued paying full-time and hourly workers for up to two weeks.
Dive Insight:
Most off-price retailers have emphasized brick and mortar over e-commerce, to leverage the power of a treasure hunt best conducted in stores. But Ross (like Burlington more recently) has eschewed it completely.
That makes the store closures necessitated by the ongoing pandemic particularly problematic for Ross, which therefore has no digital sales to at least partly offset the losses from closed stores. The company's locations have been closed since March 20, and the disease has prevented it from reopening by April 4 as planned.
That creates a cash crunch, and last month, Reuters reported that the retailer, which runs 1,566 namesake Ross Dress for Less stores and 266 dd's Discounts stores, canceled all merchandise orders through June 18 due to the toll the outbreak has taken on its business.
But almost all apparel retailers have the same problem, as e-commerce still pales to physical store sales at most. That could present Ross and its off-price rivals with an opportunity to pick up inventory at lower prices. Indeed, there is "far too much inventory already inbound for Fall," Credit Suisse analyst Michael Binetti on March 26 wrote in emailed comments regarding the Reuters report. "We expect excessive discounting, and the best offprice buying environment in a decade."
