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Simon Property furloughs 30% of workers due to coronavirus


A visitor looks down an empty hallway at The Fashion Mall at Keystone, Wednesday, March 18, 2020, in Indianapolis. Simon Property Group, the largest owner of shopping malls in the nation, is closing all of its malls and retail properties because of the coronavirus outbreak.

Darron Cummings | AP

The biggest U.S. mall owner, Simon Property Group, has furloughed about 30% of its workforce, CNBC has learned, as the company copes with all of its properties being temporarily shut because of the coronavirus pandemic.

The furloughs impact full- and part-time workers, at its Indianapolis headquarters and at its malls and outlet centers across the U.S., a person familiar with the situation told CNBC. The person asked to remain anonymous because the information has not been disclosed publicly.

Simon permanently laid off some employees also, but the exact number could not be immediately determined.

CEO David Simon will not receive a salary during the pandemic, the person said. Salaries of upper-level managers at the real estate company will be cut by up to 30%.

As of Dec. 31, Simon had roughly 4,500 employees, of which 1,500 were part time, according to its latest annual filing. About 1,000 of those people worked from Simon’s Indianapolis headquarters, it said.

A representative from Simon did not immediately respond to CNBC’s request for comment.

Wave of retail furloughs

To date, hundreds of thousands of workers in the retail industry have been furloughed because of COVID-19, between recent announcements from J.C. PenneyMacy’s, Kohl’s, Gap, Loft-owner Ascena and others. 

Luxury retailer Neiman Marcus is furloughing most of its about 14,000 workers. 

With a $4.3 billion debt load, Neiman Marcus has been on many analysts’ so-called bankruptcy watch lists, as it is in more financial distress than some of its peers. The coronavirus will prove to be a bigger burden for these companies already fighting to stay in business. 

“Unlike past recessions, this does not seem like companies are trying to figure out how to run their businesses on lighter operations … or adjust their expense structure to their revenue base,” BMO Capital Markets analyst Simeon Siegel told CNBC. “This seems like companies are trying to press pause on the world.” 

Department store chain Macy’s said Monday it is moving to the “absolute minimum workforce needed to maintain basic operations.” It has furloughed the majority of its workforce, which is roughly 130,000 people. 

“While the digital business remains open, we have lost the majority of our sales due to the store closures,” a Macy’s spokeswoman told CNBC in an emailed statement. 

Kohl’s, meantime, said Monday it will be furloughing about 85,000 of its approximately 122,000 employees. 

Penney announced Tuesday it is furloughing the majority of its hourly store workers, effective Friday. Starting Sunday, the company said a “significant portion” of workers at its headquarters in Texas will be furloughed. It had previously started furloughing workers for its supply chain division and at its logistics centers. And Penney said Tuesday that these furloughs will continue. 

Apparel maker Gap is furloughing the majority of its store teams in the U.S. and Canada, or roughly 80,000 people, pausing pay but continuing to offer “applicable benefits” until stores reopen, it said. 

Ascena Retail Group, which owns Ann Taylor and Loft, said it is furloughing all of its store workers and half of its corporate staff. As of Aug. 3, Ascena employed 53,000 people. 

Tailored Brands, which owns Men’s Warehouse and Jos. A. Bank, has furloughed all of its store workers in the U.S., in addition to a “significant portion” of workers in its distribution centers and related offices. 

Urban Outfitters said Tuesday it is furloughing a “substantial” number of store, wholesale and home office employees for 60 days, effective this Wednesday. 

Nordstrom, Victoria’s Secret parent L Brands, David’s Bridal, Steve Madden and Designer Brands are among the other retailers that have announced their plans to furlough workers, amidst the coronavirus pandemic, where already so far at least 164,610 cases have been reported in the U.S., according to the latest data from Johns Hopkins University. 

As retailers are working to slash costs, the furloughs are more akin to “Band-Aids” than a “structural shift” in these retailers’ business models, Siegel said. “Ultimately Band-Aids don’t heal.” 

The layoffs and furloughs at Simon show the commercial real estate industry is not immune to this, either. 

Similar cuts are expected to happen at other U.S. mall owners in the coming weeks, or days. Simon on March 18 announced it would be closing all of its properties temporarily, to try to help halt the spread of COVID-19. Others, such as Taubman Centers, Washington Prime Group and Unibail-Rodamco-Westfield, have followed suit. 

Rent is due

These landlords are grappling with the fact that countless retailers and restaurants, with their stores temporarily shut, will not be able to pay April rent. High-end mall owner Taubman, however, has sent a letter to its tenants saying they must still meet their lease obligations. 

Talks between many tenants and their landlords remain ongoing, as some are trying to work out abatements or deferrals. Mall owners still have their own obligations, such as utility bills and mortgage payments, that must be met. 

The Cheesecake Factory, which has 294 locations in North America, has already said publicly that it will not be paying rent in April. Simon has 29 Cheesecake Factory locations, more than any of its peers, according to an analysis by RBC Capital Markets and CoStar Realty. 

Simon on March 16 announced it had amended and extended its $6 billion revolving credit facility and term loan, giving it additional liquidity. 

Simon shares have fallen more than 60% this year. It has a market value of about $17.3 billion. 

— CNBC’s Courtney Reagan contributed to this report. 



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