The Myer Holdings Ltd (ASX: MYR) share price share price is on watch this morning following an announcement last week that its nationwide chain of retail stores will temporarily close due to the coronavirus outbreak.
Stores to close till end of April, 10,000 staff stood down
Last Friday, Myer announced all its stores nationwide are to close, for an initial 4-week period ending 27 April, although Myer will continue to operate its online businesses.
The retailer joins a growing list of discretionary retailers that have been forced to close their doors, in the last couple of days, including Country Road, Witchery, Just Cuts and Cotton On. This is on top of other retailers that have already closed, including Accent Group Ltd (ASX: AX1), Adairs Ltd (ASX: ADH), Kathmandu Holdings Ltd (ASX: KMD) and Premier Investments Limited (ASX: PMV).
Myer also announced that around 10,000 staff will be temporarily stood down without pay, although full time and part time staff will be given additional flexibility to access to their accrued annual leave and long service entitlements.
Only small number of business critical roles will continue, and the CEO, managing director and board won't receive any remuneration throughout the stand down period.
Myer has implemented a strategy to minimise the fall-out to its cost base, including discussions with landlords and suppliers.
On a slight positive note, the company believes that recent measures implemented to strengthen its balance sheet by reducing debt, as outlined it its H1 FY 2020 results, have already have placed it in a better position to deal with the enormous crisis.
However, I think that the coronavirus crisis couldn't come at a worse time for the struggling department store retailer, which is 2 years into a 5-year turnaround plan. The plan is aimed at consolidating its store national store footprint and improving its profitability in the face of growing competition on multiple fronts, including the rise of specialty brands and the growing trend of online shopping.
In addition, it looks highly likely that Myer will need to close down for longer than 4 weeks, with the Australian Prime Minister announcing on Sunday that even tougher social distancing rules are coming into play, and Australians are being urged to visit stores for only essential goods and services.
Commenting on the news, Myer CEO John King said: "[t]he decision to temporarily close all Myer stores and stand down so many loyal and dedicated team members is one of the toughest decisions this Company has faced in its 120 years of operation."
