Following the extension of the temporary closure of Vera Bradley’s retail stores, the American handbag and luggage company has announced a series of measures designed to preserve its financial liquidity during the ongoing COVID-19 crisis, including furloughs and salary cuts.
Vera Bradley’s stores have been closed since March 19 and the brand has continued to provide pay and benefits for all associates affected by the closures up until now.
However, in light of the continued disruption caused by Covid-19, the Fort Wayne, Indiana-based company has now decided to furlough the majority of its store employees, as well as certain home office associates starting April 5. A number of Vera Bradley’s distribution center employees were also furloughed last week.
According to the company, furloughed associates will continue to receive enrolled benefits for a period of up to 12 weeks from their original furlough date.
The base compensation of Vera Bradley’s remaining corporate staff and store management is also being cut on a graduated scaled from 15% to 30%, while CEO Rob Wallstrom has accepted a 75% reduction in his salary.
Cash compensation for Vera Bradley’s board members has been suspended as well, along with the company’s charitable donation matches.
Furthermore, the company has begun tightly managing its inventory levels by canceling orders, delaying receipts and seeking price concessions where possible.
Ongoing negotiations with the brand’s landlords are focusing on rent abatement and payment terms, and the company has also delayed or canceled certain planned openings of new stores.
Further measures being implemented by Vera Bradley include extending vendor payment terms and reducing non-payroll operating expenses, such as marketing and travel.
“The COVID-19 pandemic is forcing us, along with most other retailers and other industries, to make decisions that are extremely difficult, but critical, for our company and for the long-term benefit of our associates, customers, and other stakeholders,” explained Wallstrom in a release. “We are hopeful that the vast majority of our stores will be reopened within the next several weeks and that our sales revenue will begin to rebound to pre-crisis levels, thereby allowing us to remove these temporary actions.”
Along with store closures, previous steps taken by Vera Bradley to deal with the ongoing health crisis include the suspension of its share buyback program and the drawing down of $60 million on its bank line of credit.
The company reported consolidated net revenues of $127.5 million in the third quarter ended November 2, 2019, up 30.5% compared to the previous year, while the company’s quarterly net income totaled $0.1 million.