Coronavirus Update: 03.30.2020- Dansko Business Update
Sending on the behalf of Jim:
Dansko Team:
We are starting our 3rd week of temporary closure and I could not be more proud of how the Dansko team has responded to this extraordinary crisis. From efficiently closing down facilities to transitioning to working from home to maintaining communications and figuring out how to be of assistance to consumers and retailers, everyone has stepped up. Thank you!
Unfortunately, the world has changed dramatically over the last two weeks and is likely to continue to do so for the near future. I know everyone would like certainty for what this means for Dansko and for each of us individually. However, as with so many other current circumstances, we cannot count on certainty – we can only plan as best we can and be flexible in responding to ever changing circumstances.
I can tell you that we are focusing on two big picture priorities:
• How can Dansko support employees as best as we can, while also recognizing that we do not have unlimited resources?
• How do we make sure Dansko can weather this storm, and be as prepared as possible for whatever the “new normal” looks like (whenever that is)?
While it is helpful to have these two priorities for guidance, it is still not so simple. We have always recognized that Dansko has a range of stakeholders – consumers, retailers, employees, sales reps, vendors, factories, the community, etc. – and they are all under severe stress and in need of assistance. Despite all the valid requests for assistance from each of our stakeholders, Dansko does not have the resources to address all of them.
Ultimately, Dansko is a business that relies upon its ability to create value by providing footwear to consumers. This is what allows us to do everything for ourselves as employees and for the rest of our stakeholders. As I know you are aware, this worldwide pandemic has wreaked havoc on everyone’s ability to do business. That makes it exceptionally more difficult than usual to forecast revenues, anticipate the appropriate levels of inventory and expenses, and appropriately allocate dollars for employee compensation and other uses.
The best thing we can do now given the unprecedented level of uncertainty is to be flexible in terms of our people and processes, so that we can quickly adapt to changing circumstances. That also requires maintaining as much cash and access to liquidity as possible – preserving Dansko’s flexibility and carefully using our “rainy day fund” to pay employees, buy inventory, and pay essential expenses during this epic storm of unknown duration.
What this means in terms of taking care of employees is a greater focus on the present than the future, and taking measures to minimize our cash spending and maintain our flexibility. Here is what Dansko is doing right now:
• Dansko is suspending the 401(k) match effective for the next pay date on April 9, 2020 and until further notice;
• All annual compensation reviews are on hold until further notice; and
• Dansko is reviewing its current compensation and expense structure to determine appropriate adjustments and deferrals.
As much as I would like to be able to provide all of the specifics at one time, these are unprecedented circumstances. Dansko needs the flexibility to reevaluate and change plans as needed. I appreciate that everyone has their own situation to consider and plan for, and we will continue to provide updates as decisions are made and information becomes available.
Dansko is in a strong financial position, but that does not mean we can get through this crisis without any sacrifices. We still need to be prudent in the face of store closures, cancellations from retailers, reduced demand, and uncertain levels of revenue and cash flow. It is not yet clear what, if any, government assistance will be available to Dansko and its employee-owners, but we are monitoring those options as well. While these and other steps are necessary in the short term, I remain confident that there will eventually be brighter days ahead for Dansko. Thank you for your continued dedication, understanding, and support.
Jim
Dansko Team:
We are starting our 3rd week of temporary closure and I could not be more proud of how the Dansko team has responded to this extraordinary crisis. From efficiently closing down facilities to transitioning to working from home to maintaining communications and figuring out how to be of assistance to consumers and retailers, everyone has stepped up. Thank you!
Unfortunately, the world has changed dramatically over the last two weeks and is likely to continue to do so for the near future. I know everyone would like certainty for what this means for Dansko and for each of us individually. However, as with so many other current circumstances, we cannot count on certainty – we can only plan as best we can and be flexible in responding to ever changing circumstances.
I can tell you that we are focusing on two big picture priorities:
• How can Dansko support employees as best as we can, while also recognizing that we do not have unlimited resources?
• How do we make sure Dansko can weather this storm, and be as prepared as possible for whatever the “new normal” looks like (whenever that is)?
While it is helpful to have these two priorities for guidance, it is still not so simple. We have always recognized that Dansko has a range of stakeholders – consumers, retailers, employees, sales reps, vendors, factories, the community, etc. – and they are all under severe stress and in need of assistance. Despite all the valid requests for assistance from each of our stakeholders, Dansko does not have the resources to address all of them.
Ultimately, Dansko is a business that relies upon its ability to create value by providing footwear to consumers. This is what allows us to do everything for ourselves as employees and for the rest of our stakeholders. As I know you are aware, this worldwide pandemic has wreaked havoc on everyone’s ability to do business. That makes it exceptionally more difficult than usual to forecast revenues, anticipate the appropriate levels of inventory and expenses, and appropriately allocate dollars for employee compensation and other uses.
The best thing we can do now given the unprecedented level of uncertainty is to be flexible in terms of our people and processes, so that we can quickly adapt to changing circumstances. That also requires maintaining as much cash and access to liquidity as possible – preserving Dansko’s flexibility and carefully using our “rainy day fund” to pay employees, buy inventory, and pay essential expenses during this epic storm of unknown duration.
What this means in terms of taking care of employees is a greater focus on the present than the future, and taking measures to minimize our cash spending and maintain our flexibility. Here is what Dansko is doing right now:
• Dansko is suspending the 401(k) match effective for the next pay date on April 9, 2020 and until further notice;
• All annual compensation reviews are on hold until further notice; and
• Dansko is reviewing its current compensation and expense structure to determine appropriate adjustments and deferrals.
As much as I would like to be able to provide all of the specifics at one time, these are unprecedented circumstances. Dansko needs the flexibility to reevaluate and change plans as needed. I appreciate that everyone has their own situation to consider and plan for, and we will continue to provide updates as decisions are made and information becomes available.
Dansko is in a strong financial position, but that does not mean we can get through this crisis without any sacrifices. We still need to be prudent in the face of store closures, cancellations from retailers, reduced demand, and uncertain levels of revenue and cash flow. It is not yet clear what, if any, government assistance will be available to Dansko and its employee-owners, but we are monitoring those options as well. While these and other steps are necessary in the short term, I remain confident that there will eventually be brighter days ahead for Dansko. Thank you for your continued dedication, understanding, and support.
Jim
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