Hanesbrands Shuts Stores, Furloughs Employees Due to Coronavirus

Hanesbrands Inc. HBI is the latest company to tighten its control measures with increasing cases of coronavirus being reported each day. Notably, the novel coronavirus has been wreaking havoc worldwide by killing thousands of people and disrupting the global economy. In response, authorities have ordered shutdown of stores and manufacturing facilities as well as implemented social distancing, work from home options and travel bans. This will not only hurt sales and productivity but will also likely aggravate companies’ cost burden. Many retailers have stated that they will continue to give full payments or benefits to their employees during the temporary closure.

Given the unprecedented impacts of this ongoing pandemic, Hanesbrands which has closed nearly 1,200 brand stores across the United States, Europe and Australia has decided to temporarily furlough retail store employees. During this time, all employees will be offered benefits. Apart from this, the company paid salaries for two-plus weeks since store closures to these employees.

Along with these retail store employees, Hanesbrands temporarily furloughed roughly 575 other U.S. employees. These furloughed employees are eligible for all company-paid healthcare, life insurance and other benefits during this crisis. Moreover, the company has taken to temporary pay cuts for executives and salaried employees in the range of 10-30%, depending on employee level.

Similarly, retailers, including Macy’s M, L Brands LB and Kohl’s KSS announced to put thousands of employees on leave amid the coronavirus outbreak. Notably, Macy’s is furloughing most of its 130,000 workers in the United States, per sources. Also, L Brands decided to furlough employees such as store associates and those who can’t work remotely to support the online business. Kohl’s is likely to grant leave to workers at its stores and store distribution centers.

Coming back Hanesbrands, the company decided to engage in the production of FDA-approved all-cotton face masks amid the coronavirus-led face mask shortage globally. In this regard, the company expects to provide more than 320 million masks in the attempt to help contain the spread of the novel coronavirus. Moreover, the company has temporarily discontinued majority of its manufacturing operations, except face mask production. Apart from these, Hanesbrands is on track with managing its inventory levels. Also, the company’s distribution centers are operating on a demand-adjusted basis.

In an earlier press release, Hanesbrands had informed investors to enhance its financial flexibility amid the coronavirus outbreak. It is drawing down $630 million under its U.S. revolving loan facility. Also, the company is on track with reducing expenditures and managing liquidity during the crisis. Earlier, management had also withdrawn its first-quarter and 2020 guidance on account of the uncertain impact of the deadly virus on revenues and costs.

We note that shares of this Zacks Rank #3 (Hold) company have plunged 53.5% in the past year compared with the industry’s decline of 38.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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