Coronavirus claimed its latest corporate victim on Wednesday, when after close of trading on the NYSE, used car superstore CarMax (KMX 0.60%) announced plans to furlough 15,500 CarMax "associates."
"The unprecedented coronavirus pandemic," explained CarMax in a filing with the SEC, is necessitating "significant adjustments to staffing levels and other company expenditures."
In addition to the furloughs announced today, CarMax noted that it is cutting CEO Bill Nash's salary by 50%, "and each member of the company's senior leadership team is taking a reduction in pay until further notice. In addition, the CarMax Board of Directors has unanimously determined to forgo their cash retainer indefinitely."
New hires are also being frozen, inventory levels reduced, marketing spend rolled back, and store expansions and remodels halted. On the financial engineering front, CarMax is also halting share repurchases.
Regarding the 15,500 employees being furloughed, CEO Nash noted that "this has been a very difficult decision," and expressed a desire to "start pulling our team back together" once that becomes practicable. Before that can happen, however, CarMax needs to ensure it can "withstand the current environment and successfully emerge from these difficult times."
With about half of CarMax's stores either closed or "operating on a limited basis," the company simply can't afford to keep paying thousands of employees for work they're unable to perform. Moreover, CarMax noted that "consumer demand has progressively deteriorated in recent weeks."
For investors, that last bit may be the most worrisome: CarMax may be the biggest name in car sales sending its workers home this week -- but if this trend persists, it won't be the last to do so.