Capri Holdings Ltd, the parent company of luxury brands Michael Kors and Versace, has announced that it will furlough all of its 7,000 employees in North America in response to the COVID-19 pandemic. Due to government-imposed lockdowns in the United States and Europe, Capri has temporarily shut down its stores, with hopes to reopen after June 1.

Similar to many other retailers, Capri has seen a decline in the value of its shares this year. However, on Monday, the company’s shares rose by almost 25% as broader markets showed signs of recovery, indicating a potential slowing down of the virus in heavily affected regions.

Capri has assured its furloughed employees that they will be eligible for unemployment insurance and other government relief programs. The company also plans to reduce its workforce once the pandemic subsides. In an effort to cut costs, Capri is seeking national payroll subsidy programs in various European countries.

Despite the challenging circumstances, Capri’s CEO, John Idol, remains optimistic about the company’s ability to endure the crisis. Idol believes that Capri, with its size and scale, is well-equipped to navigate through this unprecedented situation.

To mitigate the financial impact of the crisis, Capri has implemented several cost-cutting measures. The board’s annual cash compensation will be reduced by 50%, and high-level executives, including Idol, Michael Kors, and Donatella Versace, will forgo their salaries for fiscal year 2021. Additionally, the company plans to reduce salaries at different levels by approximately 20% to preserve its cash flow.

As of April 1, Capri had approximately $900 million in cash and cash equivalents. In order to secure more liquidity, the company has already tapped into $300 million from its revolving credit facility.

Last year, Capri Holdings Ltd acquired Versace, expanding its luxury brand portfolio. Despite the challenges presented by the pandemic, the company remains confident in its ability to weather the storm and continue operating successfully in the future.

Useful links:
1. Capri Holdings Ltd Official Website
2. Versace Official Website