Lands’ End has furloughed 70 percent of its corporate employees, as of March 28.
The clothing retailer announced the move last week in light of the of the coronavirus crisis, a pandemic that has shuttered most of the country and has left millions unemployed.
A Lands’ End spokesperson declined to say how many people worked in the corporate headquarters in Dodgeville, Wisconsin, but the city’s mayor, Todd Novak, said he was told last week by Jerome Griffith, Lands’ End’s CEO and president, that about 1,000 employees in Dodgeville, were being furloughed.
The company’s Wisconsin-based distribution centers remain operational, with those employees receiving a temporary pay increase. Lands’ End has also made modifications to days of operation and is maintaining six feet of space between employees, the company said in a release Monday announcing the measure.
On March 15, the company announced it was closing its 26 retail locations around the country through March 29 because of the virus. Those closures have now been extended.
“At Lands’ End, the safety and health of all our employees is our first priority and we are taking steps to minimize risk through work-at-home policies, as well as practicing social distancing and enhanced sanitation in our facilities,” Griffith said in a written statement. “Given the uncertainty related to the severity and duration of COVID-19, we have also taken proactive steps to reduce costs, carefully manage inventory, and preserve liquidity.”
Cost-cutting
Some employees will return to work on Tuesday, but for many the furlough will remain in effect through at least May 1. The company did not provide specifics. Lands’ End plans to fund health insurance premiums for employees furloughed through May 1, Griffith said.
The company, which reported last month $1.45 billion in net revenues in fiscal 2019, is also undertaking a wide range of cost-cutting measures. Griffith’s salary has been reduced by 50%, and the base salaries of his executive team have been cut by by 20% with scaled reductions for other employees throughout the company.
Lands’ End is also eliminating fiscal 2020 merit increases, temporarily suspending its 401(k) match, temporarily reducing compensation for its board of directors, “significantly” reducing discretionary operating expenses and reducing capital expenditures to approximately $20 million in 2020 from $40 million in 2019.
Lands’ End has also increased its liquidity by $25 million with a maximum borrowing cap of $200 million under an asset-based financing program that uses collateral such as inventory, equipment and property. The company has drawn $75 million from the facility to provide it with extra working capital and cash on hand.
“Our brand has made it through rough environments over its nearly 60-year history, and the actions we are taking combined with our liquidity position give me confidence in our ability to weather this storm,” said Griffith, who joined Lands’ End in 2017.
Employment powerhouse
Lands’ End was founded in Chicago in 1962 by Gary Comer
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, who had started a mail-order sailing equipment business. A year later, Comer and five partners incorporated Lands’ End Yacht Stores. In 1978, Comer moved the warehouse and phone operations to Dodgeville, and in 1986 the clothing company went public. He stepped down as president in 1990 but remained chairman of the board until Lands’ End was sold to Sears Holdings Corp. in May 2002. He died in 2006 at the age of 78.The company, which split from Sears in 2015 and is now again publicly traded, has been a regional employment force for southwest Wisconsin, supplying jobs in warehousing, shipping, customer service and other departments essential for a major corporation with a global reach.
Novak said Lands’ End employs roughly 4,000 people in Dodgeville and is Iowa County’s largest employer. But because most businesses and all schools in the community and the state are shut down, Novak said, the impact of having 1,000 people out of work is hard to gauge.
“Jerome, their CEO, has been calling me a couple times a week and he’s very concerned about his workforce, but realistically he’s got to look at the bottom line, so he’s trying to make this as painless as possible for his employees,” Novak said. “He told me his goal was to get everybody back to work as soon as possible. He’s in the same position as everybody else that has a business.”
As part of its local response to the pandemic, Lands’ End has donated new scrubs to Upland Hills Health in Dodgeville and has provided the staff of Reedsburg Area Medical Center with jackets to wear in its outdoor triage area. The company, in partnership with the Wisconsin Department of Administration, is also providing, free distribution center capacity for the staging and distribution of personal protection equipment by the Department of Military Affairs.
Dodgeville is a city of about 4,700 people and is the seat of Iowa County, where its historic courthouse has stood since 1859. The downtown also has a movie theater, clothing stores and Bob’s Bitchin’ BBQ, which draws employees from Lands’ End and diners from throughout the region.
The city is surrounded by prime farmland. And although the state’s farm economy has been rocked by low milk prices, tariffs and the loss of more than 800 farms in 2019, spring brings more activity to the area from those that remain and some semblance of normalcy as fields are tilled and seeds sown.
“Farmers are getting ready, so those essential businesses are open,” said Novak, who is also a Republican state Assembly representative and former editor of the Dodgeville Chronicle. “I just think the longer this goes on and the nicer the weather gets, people are going to get more frustrated.”
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