Automotive retailer CarMax Inc. is requiring more than half of its employees nationwide — about 15,500 workers — to take unpaid furlough leave starting April 18 as the coronavirus pandemic takes an economic toll on the Goochland County-based chain.
Most of the affected employees work at one of CarMax’s 70 stores currently closed because of state government mandates, including those in California, North Carolina and Texas. The chain has another 36 locations, like those in Maryland, Illinois and New York, that operate by appointment only.
The 10 stores in Virginia, including the two in the Richmond region, remain open.
CarMax operates 217 stores and has about 27,000 employees, including more than 1,600 in the Richmond region at its stores and corporate headquarters.
Of the 15,500 affected workers, about 450 of them to be furloughed are in Virginia. The company is reducing staffing at its Virginia locations because demand for used cars has declined in recent weeks.
The company didn’t say how long the unpaid leave would be. “We currently view the furlough as temporary but are unable to predict the length at this time,” a spokeswoman said.
CarMax said it is making the significant adjustments to its employee staffing and to other company expenditures in response to collapsing sales during the pandemic.
“This has been a very difficult decision. Each and every one of our associates are incredibly important to us. We will not rest until we can start pulling our team back together,” said Bill Nash, CarMax president and CEO. “I believe that these steps will help our company withstand the current environment and successfully emerge from these difficult times.”
Nash is forgoing 50% of his salary. His base salary was $1.063 million in the fiscal year that ended February 2019, regulatory filings show.
In addition to Nash, CarMax said four executive vice presidents will forgo 30% of their pay and the six senior vice presidents will see a 20% reduction in their base salaries until further notice. Each of the retailer’s 12-member board also has agreed to forgo his or her cash retainer indefinitely.
The affected employees will receive transition pay before they are put on furlough, the company said. CarMax also will pay the current cost of the employee’s portion of the medical insurance plan for furloughed workers enrolled in its plan as well as paying the employer portion, until further notice.
CarMax said it is taking other steps to cut costs, including having a hiring freeze, reducing inventory levels, reducing marketing spending, ceasing store expansions and remodels, and halting the share repurchase program.
“We will continue to keep our stores open where permitted to support our customers’ essential needs for reliable vehicles and to provide as many jobs as possible for our associates. We are focused on positioning the company for a strong recovery when this crisis is over,” Nash said.
Furloughs have hit many sectors of the national and regional economy. For instance, Chesterfield County is furloughing more than 500 part-time and full-time employees.
Macy’s, Gap, Kohl’s and other national retailers are furloughing tens of thousands of employees in response to collapsing sales during the pandemic. Dozens of local restaurants and hotel operators also have been furloughing workers in the past several weeks.