In a statement posted to its investor website, CarMax announced it plans to furlough about 15,500 employees, starting April 18. To further cut costs, Carmax’s senior leadership will also take pay cuts, including a 50% salary reduction for Carmax President and CEO Bill Nash.
Used car company CarMax has been in a state of barebones operation for several weeks due to the spread of the coronavirus and the COVID-19 pandemic. A large majority of its shops across the country are currently closed, with a few exceptions where stores have remained open in extremely limited capacities (a full list of closed stores can be found on the CarMax website).
“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 in the statement. “For the safety of our associates and customers, we have implemented social distancing practices and enhanced cleaning measures in all locations.”
But with so many stores closed and a major reduction in monetary intake, CarMax was forced to take actions to cut costs, including furloughing at least 15,500 employees. For those who are unfamiliar with the term, a furlough is slightly different than getting laid off or fired because it means CarMax hopes to re-hire the employees back when the company is more financially stable. When that would be, or if all employees would be able to return, is impossible to say at this time, however, and it’s not a guarantee.
“This has been a very difficult decision,” Nash said in the 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.”
A tiny silver lining is CarMax’s decision to help select furloughed employees with their medical costs. For employees who were using the CarMax medical plan, CarMax will pay the employee’s portion and the employer’s portion of the medical plan.
More cost-cutting measures include Nash’s 50% salary cut, undisclosed salary cuts to senior leadership, and a decision from the CarMax board of directors to forgo its cash retainer indefinitely. According to Automotive News, via a CarMax proxy statement, Nash made about $1,000,000 last year. The company also reduced inventory levels, cut marketing spending, ceased store expansion and remodels, and stopped the share repurchase program.
The furloughs will last until further notice.