In a sweeping letter to co-op members, CEO Eric Artz addressed some hard truths, albeit with cautious optimism, about the company’s path ahead.
“We believe this will be the most challenging period for our business,” Artz said in a sobering statement this week.
In an email addressed to the “Co-op Community,” Artz acknowledged that a return to normal will be slow to come — and will require some sacrifice. That sacrifice, it turns out, means cut salaries, furloughs, severances, and abridged services in the months to come.
When the COVID-19 outbreak began in March, Artz made the decision to close all 162 retail locations, though the co-op continued to honor online orders. During that time, Artz said REI would pay all retail employees and maintain benefits through April 14.
That date roughly coincided with President Trump’s intent to lift stay-at-home recommendations and reopen many businesses by Easter (April 12). But as that date fast approaches with no return to normalcy in sight, REI’s executive team had to tackle what to do next.
REI Furloughs Retail Employees, Maintains Health Care
Undoubtedly, the most painful piece of REI’s plan comes in the form of employee furloughs. Artz announced a 90-day unpaid furlough for most retail employees, beginning April 15.
However, Artz also noted that REI will continue to pay health benefits for all eligible furloughed employees and pick up the tab for their premiums as well. During that 90-day period, all furloughed employees can apply for unemployment benefits.
In addition, Artz acknowledged that the co-op’s headquarters workforce would need to contract. While he didn’t say how many employees would be impacted, Artz did say severance packages would be issued, along with outplacement services.
Finally, Artz said he will forfeit 100% of his salary for the next 6 months, as well as “all of my incentive eligibility for 2020.” In addition, REI’s board of directors will forfeit their fees for the same 6-month period, and Artz’s leadership team will accept a 20% pay cut and waive any incentives for this year.
“This current crisis is testing us all, but we have worked to make sure our decisions and actions are consistent with the co-op’s mission and values,” Artz wrote.
“To everyone who has reached out with suggestions about ways to help the co-op and our people during this period, I thank you. We have considered every option, and I’m confident the actions we’re taking are the most beneficial for affected employees.”
When Will REI Stores Reopen?
Although online shopping is still available, most co-op members are probably wondering: When will stores reopen?
While current federal guidelines will expire at the end of the month, Artz laid out a gradual reopening plan that will occur “hopefully in the next 45 days.” But that won’t mean flipping the lights on and unlocking the doors.
Artz said REI will begin the process of reopening retail stores with curbside pickup, noting that the co-op will welcome shoppers back into stores only “when it is safe to do so.”
When reached for clarification, REI declined to further comment on Artz’s statement.