Capri Holdings (CPRI) - Get Report shares jumped after the London fashion group, which includes Michael Kors, Versace and Jimmy Choo, said it would furlough its 7,000 North American store workers, as the coronavirus continues to rage.
It expects its North America and Europe stores to be closed until about June 1. The furloughs are effective April 11.
The company is also reducing pay for it board and executives, including Chief Executive John Idol. And it expects future staff reductions.
In addition, it’s cutting inventory purchases, extending payment terms, trimming capital spending, minimizing operating expenses and suspending share buybacks.
As of April 1, Capri had about $900 million of cash and cash equivalents on its balance sheet. It has fully drawn the $300 million remaining available under its revolving-credit facility.
“The impact of Covid-19 on the world and the global economy is changing rapidly in ways we could not have anticipated,” Idol said in a statement.
“This is a very challenging time for our business. We are diligently working to address this unprecedented situation by taking measures to protect our employees and maintain the company’s financial flexibility.”
Idol expressed sympathy for Capri’s workers -"the heart and soul of our company.”
But "these actions are necessary in order to enable us to overcome the burdens of this financial crisis. We continue to believe in the power of our three fashion luxury brands and the resiliency of our company to navigate these extraordinary times.”
Capri shares recently traded at $10.50, up 23%.