Capri Holdings, which owns Michael Kors, Versace, and Jimmy Choo, is adjusting its business following the extended shutdown due to the spread of Coronavirus.
Since March 18th, the company has provided salary continuation and benefits to all retail store employees impacted by its temporary store closures that started on that same date and were expected to end on April 10th.
The company now anticipates that retail stores in North America and Europe will be closed until approximately June 1st and will only reopen once it is deemed safe to do so. Therefore, the company will furlough all of its approximately 7,000 North American retail store employees, effective April 11th.
During this time, the company will continue to pay the employer portion of benefits to support impacted retail personnel. In the United States and Canada, furloughed employees are also eligible for unemployment insurance as well as other government relief programs where available. The company expects to require a smaller workforce as it resets its business post-COVID-19. The goal of the company is to return as many retail employees as possible to work in the second half of the fiscal year as its business rebuilds.
The company has also taken further additional actions to preserve its cash flows like reducing the salaries of its board of directors by 50 percent for all of Fiscal 2021. John D. Idol, chairman and chief executive officer of Capri Holdings; Michal Kors, chief creative officer of Michael Kors; Donatella Versace, chief creative officer of Versace; and Sandra Choi, chief creative officer of Jimmy Choo, have each voluntarily elected to forgo their salary for Fiscal 2021 (except for the minimum necessary to cover benefits or to otherwise comply with international statutory requirements). In addition, the company will be exploring opportunities to reduce overall salaries at various levels throughout the organization by approximately 20 percent.
It is also managing inventory purchases in light of the store closures in North America and EMEA and the anticipated decreased demand in the second half of the fiscal year by reducing or canceling commitments, redeploying inventory, and consolidating upcoming seasons.
The company is working closely with its partners to extend the terms of its future payables. And is applying for national payroll subsidy programs in various countries throughout Europe to further reduce payroll expense.
“We believe that these actions are necessary in order to enable us to overcome the burdens of this financial crisis,” said Idol. “We continue to believe in the power of our three fashion luxury brands and the resiliency of our company to navigate these extraordinary times.”