Volcom Furloughs 75 Percent of Its Workers While Making Plans to Ramp Up
Retailers and malls shut their doors on orders from local and state governments to help curb the spread of COVID-19, bringing a slowdown to the operations of brands and manufacturers.
The action-sports brand Volcom furloughed 75 percent of its U.S. employees last week and all of its European employees. Ryan Immegart, Volcom’s chief marketing officer, said that he anticipates a rebound.
“Globally, barring Europe, Volcom is still fully operational with a U.S. skeleton crew working from home following various government orders accordingly,” he said. “We are operating efficiently and strategically to ensure that when the impacts of the virus start to improve that we are able to ramp up very quickly.”
Volcom’s action comes as brands and retailers increasingly experience strain, said industry analyst Jeff Harbaugh in a March 23 research note, which he titled “Keep Calm and Carry On.”
“As I imagine you are aware, some industry companies have closed stores but kept employees on the payroll,” he said. “This is easier for big companies with solid balance sheets, but it can’t go on forever.”
The current crisis puts a lot of companies in a tough position, Patrik Schmidle, president of ActionWatch, a service provider for action-sports brands and retailers.
“How do you plan? Having to shut down all of your direct stores and then support all of your employees and your other expenses. At least some of these companies have revenue trickling in with e-commerce,” Schmidle said. “Companies have to act and do something.”
Outside of the biggest action-sports companies such as Vans, the brands in this sector are private companies working on small margins. Their biggest costs often are employees.
Other action-sports brands are taking a wait-and-see approach on what to do next. Joel Cooper is chief executive officer of Lost International, which licenses the name of the …Lost surf and action-sports brand domestically and internationally. His company’s 20 employees are still working, he said, adding that when the pandemic subsides, it might take time for the apparel business to get back on its feet.
“How long will it take for retailers to get up and start buying goods again? How quickly will shoppers come back to stores?” Cooper asked. “If there is any part of the business that has been helped, it is online.”
On March 23, the Federal Reserve announced new measures to support the economy and businesses during the coronavirus crisis. In the announcement, it said that the U.S. Department of the Treasury will provide $40 billion in equity using the Exchange Stabilization Fund to help support a flow of credit to employers, businesses and consumers.