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Cato Is the Latest Retailer to Extend Store Closures and Furlough Its Workforce

By Jon Quast - Mar 31, 2020 at 9:16AM

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Even employees at the corporate office are being furloughed, as North Carolina's strict stay-at-home directives affect its Charlotte headquarters.

Women's fashion retailer The Cato Corporation (CATO 3.96%) is keeping all its stores closed through at least April 16 due to the COVID-19 pandemic. The company operates 1,300 stores across the U.S. that are currently closed, but it had hoped to reopen by April 1. However, as the spread of the coronavirus worsens, companies like Cato are forced to extend store closures for the time being.

As a result, much of Cato's workforce is now furloughed. This includes employees at the distribution center as well as corporate employees at the home office in Charlotte, North Carolina.

A "sorry we are closed" sign hangs on a door.

Image source: Getty Images.

What about e-commerce?

This situation isn't unique to Cato, as many consumer-discretionary retailers are left with no choice but to keep locations closed. Macy's (M 5.76%) just furloughed the majority of its 130,000 employees as stores remain closed indefinitely. Similarly, luxury home-furnishings retailer RH (RH 5.41%) is keeping its stores closed indefinitely and paying its employees through April 3. 

But this may be a particularly difficult time for Cato. Its corporate headquarters and only distribution center are in Charlotte. Gov. Roy Cooper of North Carolina signed a statewide stay-at-home order that took effect on Monday. As a nonessential retailer, Cato has seen its Charlotte workforce directly impacted. 

Businesses like Macy's at least have some e-commerce to fall back on. But with Cato's distribution-center workers furloughed, it won't have the same option. Even so, the damage from losing its e-commerce revenue is minimal compared with having stores closed. In 2019, Cato's e-commerce operations generated less than 3% of total revenue.  

All furloughed employees enrolled in benefit programs will continue receiving benefits for now. Cato did not say for how long.

Jon Quast has no position in any of the stocks mentioned. The Motley Fool recommends RH. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Cato Corporation Stock Quote
The Cato Corporation
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Macy's, Inc. Stock Quote
Macy's, Inc.
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