As COVID-19 continues to hurt businesses around the country, retail chains are having to make some very tough decisions.
In order to avoid bankruptcy and store closures, countless businesses are being forced to layoff a percentage of their employees.
Though it’s not an easy decision and certainly not what any business wants to do, it often becomes the only choice.
Kohl’s, which has definitely struggled throughout the global pandemic, just announced they’ll be laying-off about 15% off its corporate employees.
Kohl’s announced their decision to lay-off 15% of its corporate employees on Tuesday, September 15, and shared the news in a securities filing.
The company explained they made the decision in order to “further align its cost base in response to the business impact resulting from the COVID-19 pandemic.”
According to Kohl’s, these layoffs will save the company about $65 million a year, despite the fact that there will be a one-time cost of $23 million this year.
One can only assume the $23 million has to do with severance packages for the employees who are being let go.
The decision to lay-off 15% of employees comes less than a year after Kohl’s revealed their plans to save $100 million from various restructuring actions.
Though pretty much every retail business is deeply struggling (unless you’re Amazon, of course), Kohl’s has been struggling for a while.
As foot traffic in department stores continues to decline, so does Kohl’s traffic.
They have struggled to maintain growth and they even had a difficult time during the holiday period, which is usually the retail business’s biggest time of the year.
Not to mention, being forced to close for multiple months when the pandemic hit was an extreme setback, as they were forced to furlough employees and cut costs wherever they could.
Cutting 15% of employees may seem like a large number, but it was the right move, at least according to a Credit Suisse analyst by Michael Binetti.
“While the cuts were no doubt a difficult situation … unfortunately we think it was prudent for [Kohl’s] to make that tough call heading into the post-COVID reality,” told Retail Dive.
Despite the fact that Kohl’s is struggling, and will probably struggle for a while longer, it was a necessary cut in order for the business to have success in the future.
These cuts are difficult now and will be hard for the company, but it will hopefully be what saves them in the long run.