(Reuters) – Capri Holdings Ltd <CPRI.N> will furlough all its 7,000 retail staff in North America due to the coronavirus outbreak and expects to reopen stores around June 1, the owner of Michael Kors and Versace brands said on Monday.
The company’s shares, which have lost more than three-quarters of their value this year, rose nearly 28%, as broader markets rallied on hopes that the pandemic was leveling-off in some of the hardest-hit regions.
Shares of rival and Coach owner Tapestry Inc <TPR.N> were up about 16%.
Many store-based U.S. retailers, including Kohl’s Corp <KSS.N>, Macy’s Inc <M.N> and Gap Inc <GPS.N>, have indefinitely shut their stores and furloughed tens of thousands of employees, while tapping their credit lines to shore up cash to ride out the hit from the outbreak.
Capri, which had a total of about 17,800 employees at the end of fiscal 2019, said the furloughed employees were eligible for unemployment insurance and other government relief programs.
The Jimmy Choo owner said it would need a smaller workforce once the pandemic ends and was applying for national payroll subsidy programs in various European countries to reduce payroll expense.
“Given our size and scale, we believe that Capri is well-positioned to continue to operate its business despite this unprecedented situation,” Chief Executive Officer John Idol said in a statement.
The board’s annual cash compensation will be slashed by 50% and several executives, including Idol, designers and Chief Creative Officers Michael Kors and Donatella Versace, will forgo their salary for fiscal 2021, Capri said.
The company, which acquired Versace last year, said it would also look for ways to reduce overall salaries at various levels by about 20% to preserve cash flows.
Capri had total cash and cash equivalents of about $900 million, as of April 1. It has fully drawn $300 million available under a revolving credit facility.
(Reporting by Nivedita Balu in Bengaluru; Editing by Maju Samuel and Sriraj Kalluvila)