CarMax is furloughing about15,500 employees, effective April 18, while also slashing executive pay and other costs.
The cutbacks come as about half the company's 217 U.S. stores are ether closed or operating on a limited basis due to the coronavirus outbreak, and "consumer demand has progressively deteriorated in recent weeks," the retailer said in a statement Wednesday.
Affected employees are being given transition pay prior to the start of their furlough. They are not being paid by CarMax after their furlough date, a company spokesperson said in an email. CarMax said it will cover all affected employees' costs under the company's medical plan until further notice.
"This has been a very difficult decision," CEO Bill Nash said in a statement. "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. I believe that these steps will help our company withstand the current environment and successfully emerge from these difficult times."
Nash is immediately forgoing 50 percent of his salary, the company said. According CarMax's 2019 proxy statement, the most recent available, Nash had a base salary of $1,063,475 in the company's fiscal 2019 year, not including bonuses and other compensation.
At the same time, each member of the company's senior leadership team is taking a reduction in pay until further notice, the company said, though it did not detail the cuts. CarMax has also implemented a hiring freeze, is reducing inventory levels, slashing marketing outlays and has put a halt to new store openings and remodels.
"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," Nash said. "For the safety of our associates and customers, we have implemented social distancing practices and enhanced cleaning measures in all locations. We are focused on positioning the company for a strong recovery when this crisis is over."
CarMax, the largest used-vehicle retailer in the U.S., reported record sales and earnings for its fourth quarter and fiscal year, ended Feb. 29, and momentum continued into March — for about a week.
After that, business fell off dramatically due to the spread of the novel coronavirus which causes the COVID-19 disease.
"In all my years at CarMax, I've never experienced a month like we had in March," Nash said in an earnings call last week, adding it was "the most volatile month I've ever seen."