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Macy’s furloughing most of its 125,000 employees

A electronic billboard displayed advice on how to cope with the coronavirus in front of a closed Macy’s department store in Santa Ana, Calif.
A electronic billboard displayed advice on how to cope with the coronavirus in front of a closed Macy’s department store in Santa Ana, Calif.Chris Carlson/Associated Press/Associated Press

WASHINGTON — Macy’s is furloughing most of its 125,000 employees because coronavirus-fueled store closures have caused its sales to all but disappear.

The nation’s largest department store chain, which shuttered its 775 Macy’s, Bloomingdales, and Blue Mercury locations on March 18, said the outbreak continues to take ‘‘a heavy toll’’ on its business. ‘‘We have lost the majority of our sales due to the store closures,’’ it said in a statement Monday.

The company said it will keep ‘‘the absolute minimum workforce’’ for streamlined operations, with a focus on its digital business, distribution centers, and call centers. Furloughed employees will continue to receive health insurance at least through May. Macy’s said it expects to bring back employees ‘‘on a staggered basis as business resumes.’’

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The New York-based retailer said it has taken significant steps to stem the financial fallout in recent weeks. It has canceled orders, implemented hiring and spending freezes, and suspended payouts of its dividend. It also has delayed bonuses and 401(k) matches, and says executives will take temporary pay cuts beginning in April. Jeff Gennette, Macy’s chairman and CEO, is forgoing pay until the crisis subsides.

Industry experts said the announcement was probably just the beginning of widespread layoffs and furloughs by major retail chains as they come to grips with what could be months of store closures.

‘‘The floodgates are wide open,’’ said Mark Cohen, director of retail studies at Columbia University’s business school and the former chief executive of Sears Canada. ‘‘Now that the pipe dream of an Easter opening is over, companies are trying to figure out how to protect their ability to come out of this when it’s all over, whenever that might be.’’

President Trump on Sunday extended social-distancing guidance through April 30 and backed off his earlier hopes that the country would be ‘‘opened up’’ by Easter, adding that US deaths from the outbreak are likely to peak in two weeks. Shortly before Trump’s comments, the nation’s top infectious diseases expert, Dr. Anthony Fauci, and the White House’s coronavirus response coordinator, Dr. Deborah Birx, told Trump the country could see up to 200,000 coronavirus-related deaths.

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Macy’s was already on shaky ground before the coronavirus outbreak. In February, it announced it would close 125 stores — about a fifth of its total — and lay off about 2,000 workers after a disappointing holiday season.

‘‘Companies like Macy’s that didn’t have a lot of momentum in the first place are at the most risk,’’ he said. ‘‘Macy’s, which was not on the brink but was heading there, is now standing at the edge of the abyss, and these types of furloughs are only going to become even more widespread.’’

From tourism to retail to white-collar jobs, workers nationwide are facing an unprecedented wave of layoffs, furloughs, and pay cuts as entire industries come to a virtual standstill. Last week, Labor Department data showed that a record 3.3 million Americans had applied for unemployment benefits the week before. And economists say more than 40 million Americans could lose their jobs by mid-April.

Retailers such as Macy’s have struggled for years to get more shoppers into their stores, but those efforts have ground to a halt in recent weeks. Thousands of stores have temporarily closed as local governments order millions of Americans to stay home. Macy’s struggles, analysts said, are likely to reverberate throughout the retail industry: The chain is an important anchor for hundreds of shopping malls in the country, which means every move it makes has lasting impacts for a number of smaller retailers and mall operators.

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Foot traffic at retail stores has largely vanished, and the retail sector is likely facing ‘‘broad store and mall closures . . . as the nation works together to’’ reduce spread of the novel coronavirus, Cowen’s Oliver Chen wrote in a note to clients on Monday.

Macy’s, he and colleagues said, has enough cash to survive about 4½ months of store closures. They estimated the retailer spends about $227 million a month on workers’ paychecks, with about half of that going to its 100,000 store employees.

As the pandemic wreaks economic havoc, the US government is preparing to send checks or direct deposits to most Americans. The stimulus would provide $1,200 payments to adults with annual incomes up to $75,000, plus an additional $500 per child.

But some analysts say those payments will do little for most retailers.

‘‘I don’t suspect many people are in the market for spring fashion right now,’’ said Cohen. ‘‘There is no telling when this is going to end.’’