Fossil Group is cutting 10% of its corporate staff, the latest example of a retail business reopening as a smaller operation while the U.S. jobs recovery depends on all industries bouncing back.
The Richardson-based wholesaler and retailer of fashion watches and accessories said Monday that it is cutting about 100 of its 1,000 corporate jobs at its headquarters.
The job cuts begin in July, and employees are also learning this week that their pay will be cut. The “small pay decrease” for salaried corporate staff “will result in saving a number of full-time jobs,” Fossil said. Fossil chairman and CEO Kosta Kartsotis owns 6.6% of the company and hasn’t received a salary or any stock awards for several years.
Retailers across the country have reopened their stores and brought back furloughed workers to run them, but at the same time many are permanently closing stores and cutting jobs. Smaller store counts end up forcing cuts at corporate, distribution and customer service operations.
“The COVID-19 pandemic has created unprecedented challenges for the entire industry,” said Darren Hart, Fossil’s executive vice president of human resources. “We have experienced a severe impact to our business, and, while slowly improving, we are taking these proactive measures to ensure the long-term financial sustainability and success of our company.”
Since the pandemic started, Fossil has been able to keep almost all its corporate staff working at full pay by tapping the Texas Workforce Commission’s shared work program. The company had about three human resources staffers working 10 to 12 hours a day to enter employee reports and prevent layoffs.
Under the state’s program, lost wages because of reduced work hours are supplemented with unemployment benefits. Companies can tap the program if normal weekly work hours for employees are cut by at least 10% but not more than 40%. And the hours reduced must affect at least 10% of the employees in a specific unit, such as a corporate office, or stores.
Since March, Fossil has been able to renegotiate its debt, and it has replaced some of the sales it lost due to store closures through its e-commerce business. The company has said that it’s expecting a slow rebuild to full recovery. This year, Fossil expects to have as many as 100 fewer stores operating worldwide. It operates 447 stores globally. Fossil has reopened more than 160 of its 210 U.S. stores as of Monday, including its store at NorthPark Center.
Retailers have announced three times the number of permanent job cuts so far this year compared with last year. Through May, retailers have announced 151,416 layoffs compared with 50,243 during the first five months of last year, according to Chicago-based outplacement firm Challenger, Gray & Christmas.
The June U.S. jobs report will be released Thursday, and retail jobs will be a focus as consumer spending has picked up. The retail industry would have to rehire more than 2 million people to employ the U.S. workforce it had a year ago.
In May, employment in retail trade rose by 368,000 after a loss of 2.3 million in April.
Fossil’s wholesale customers, including department stores, are among the traditional retailers that were struggling before the coronavirus pandemic.
Fossil’s staff cuts follow Macy’s decision to cut 3,900 corporate and management jobs after its restructuring that was forced by the pandemic.
Macy’s said last week that most of its remaining furloughed employees are returning to work starting July 5. But it has also reduced staffing at its stores, distribution and customer service centers to reflect lower sales. Macy’s CEO Jeff Gennette said the company’s decisions reflect the fact that Macy’s “will be a smaller company for the foreseeable future.”
“We are fighting for survival,” Macy’s said in a statement to the Retail, Wholesale and Department Store Workers Union, which represents many of its employees in the Northeast.
While J.C. Penney filed for bankruptcy to preserve its 85,000 jobs, the company is preparing severance packages for thousands of workers who will be laid off once closing sales are completed at about 150 stores in the coming weeks. Penney’s has store closing sales underway at 136 stores and will start closing sales this week at 13 additional stores. Penney entered bankruptcy with 846 stores and is expected to close more.
Nordstrom will have a smaller workforce because it’s closing 16 of its 121 full-line stores, including one in Texas at North East Mall in Hurst. Some analysts believe the company is also planning some corporate job cuts.
Houston-based Stage Stores, which operates Bealls stores in North Texas, filed for bankruptcy and is closing stores. This month, Florida-based Stein Mart, which operated 41 of its 283 stores in Texas, said it may be forced to seek bankruptcy protection due to the pandemic’s impact on its business.
Twitter: @MariaHalkias
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