Shares of Kohl's (KSS 1.72%) were down on Tuesday, after the company said it has furloughed its store employees and taken other actions to conserve cash through coronavirus pandemic -- including "evaluating" the future of its high-yielding dividend.
As of 2 p.m. EDT, Kohl's shares were trading down about 5.6% from Monday's closing price.
In a late-afternoon press release on Monday, Kohl's said its brick-and-mortar stores will remain closed indefinitely due to the coronavirus pandemic, and announced a series of actions to conserve cash until it can reopen. Those include:
- Furloughing all retail employees, as well as some employees of its corporate office. Kohl's will continue to provide healthcare benefits to furloughed employees who have them. CEO Michelle Gass will also forgo her salary for the time being.
- Cutting capital expenditure plans by $500 million and working to reduce other ongoing costs (such as marketing and technology-related costs) as much as possible.
- Suspending share repurchases.
- "Evaluating" its dividend program.
The company also said that it will fully draw down its $1 billion revolving credit line.
But it's probably that last bullet point -- the warning that a dividend cut may be coming -- that has investors concerned today. With the steep decline in Kohl's share price over the last several months, its dividend yield has risen to a whopping 17.6%. That's almost certainly too high to sustain for much longer.
Kohl's said its online store remains open, and starting on April 2, customers will be able to pick up online orders at local stores. But the company, which withdrew its prior 2020 guidance on March 19, hasn't yet said when it'll be able to offer an outlook for the rest of the year.