Footwear manufacturer and retailer Designer Brands (NYSE:DBI) has been caught flat-footed by the coronavirus pandemic that's left its business reeling.
After the shoe specialist announced it was closing all of its stores, CEO Roger Rawlins said it is essential the company "pivot to operating as a dot-com-only business." Any personnel not supporting its online business -- more than 80% of its workforce -- is being put on a "temporary unpaid leave of absence," and even those who remain will see an indefinite cut in pay. Executives and directors are taking a 20% cut in pay and compensation.
The only viable alternative
Rawlins called pandemic an unprecedented event that is causing the company to take drastic action to save itself while also protecting its employees. While it intends to reopen stores as soon as the COVID-19 disease is contained, the shoe seller needs to rely upon its online business to survive.
"We are an e-commerce retailer with the reach of 700 fulfillment points and multiple websites to serve our customers across North America," Rawlins noted in a letter posted on Designer Brands' website. The retailer has over 900 stores in North America that operate under the DSW, Shoe Company, and Shoe Warehouse banners.
The company has initiated a hiring freeze and put on hold any merit increases for 2020, though bonuses that were earned for fiscal year 2019 will be paid. Designer Brands slashed its dividend from $0.25 per share to $0.10 per share this month to preserve liquidity.