The Container Store has provided an update on its response to the evolving COVID-19 pandemic, and has taken measures such as reducing store hours and furloughing a portion of its corporate employees.
The company has temporarily reduced store hours for all of its stores that remain open. The company is operating during the following times, with further reductions in some locations: Monday through Saturday: 10am to 6pm; Sunday 11am to 6pm. Previously, the company temporarily closed approximately 40 select stores based on guidance from government officials and health authorities, as well as other location-based factors.
All store employees impacted by the temporary closures are receiving two-weeks’ pay and benefits. Additionally, strict health and safety protocols to safeguard both employees and customers are being followed in the stores that are currently open, including reduced hours, intensive and frequent cleaning procedures, limitations on the number of customers shopping in each store at any given time and having store personnel work only if they are comfortable doing so.
As a result of the temporary store closures, the company will require a smaller workforce to execute on the critical activities of the business. It will be furloughing a portion of corporate employees starting March 30. Impacted corporate employees will continue to receive enrolled benefits through the end of April 2020.
In connection with the employee furloughs, the company is also reducing the base salaries of its executive officers. Effective March 30, the base salaries of Melissa Reiff, chairwoman and CEO, and the company’s other executive officers, will be reduced 45% and 33%, respectively. In addition, the base salaries of all other members of the company’s senior management team, as well as other certain salaried employees, were temporarily reduced. All furloughs and reductions of pay will remain in effect for a period to be determined and will be periodically reassessed as the situation develops. The non-employee members of the company’s board of directors have also agreed to waive their quarterly retainer fees scheduled to be paid on April 1.
Additionally, the company drew down $50 million under its revolving credit facility in an abundance of caution and as a proactive measure. As a result of the drawdown, the company has an outstanding balance of $78 million under the revolving credit facility.
Melissa Reiff, CEO, Container Store, said, “We are making the difficult decisions to adjust our store operations and reduce our workforce in light of the challenges we are facing during this unprecedented time. While these are the most difficult decisions we have made in our company’s history, we have a responsibility to protect the safety of our people, while also preserving our long-term ability to offer jobs and benefits to our employees and product and services for our customers.”
Reiff continued, “Our sales performance was tracking to our plans until mid-March; however, we have since seen a significant traffic decline in stores which has been partially offset by a surge in our online demand. I want to thank all of our teams for executing on behalf of each other and our customers in this challenging environment, and adhering to the strict health and safety protocols we have instituted across our stores, distribution centers and home office. The aggressive actions we are taking in order to tightly manage our costs, working capital and capital expenditures are intended to preserve our financial health while we simultaneously work to ensure we are ready to ramp our operations back up as soon as conditions allow.”