Internewscast
Image default
Home » These companies are returning more money to shareholders after cutting jobs
Business World News

These companies are returning more money to shareholders after cutting jobs

Shoppers stand in line to enter a Foot Locker Inc. store at the Queens Center shopping mall in the Queens borough of New York, U.S., on Wednesday, Sept. 9, 2020.

Peter Foley | Bloomberg | Getty Images

Dividends and buyback programs are slowly returning, but for some companies, the reinstatement of capital return plans follows layoffs and permanent job cuts.  

In March and April, the coronavirus pandemic spurred a number of companies to put their share buyback programs on pause and suspend or slash their dividend payments. In the case of some companies, like airlines and restaurant chains, the measure was part of a scramble for cash as the crisis threw their businesses into turmoil and demand collapsed. In the second quarter of 2020, dividend payments fell to their lowest level in more than a decade, and Bank of America estimated that buybacks plunged about 90%. 

For investors, a dividend payment makes a company’s stock more attractive during times of market turbulence. Investors also like when companies repurchase their shares because it drives up the price of the stock and its earnings per share. Critics of the practices say that these decisions keep a company from investing long-term in its own business, fattens the pockets of executives and causes wage stagnation for its workers.

Suspending dividends and buybacks weren’t the only measures taken by companies in the early days of the crisis. Many also rolled out cost-cutting measures, like furloughing workers and slashing their advertising budgets. As the pandemic has stretched on, some of those job cuts have become permanent, with companies like Kohl’s and Boeing announcing layoffs. The August unemployment rate was 8.4%, according to the U.S. Department of Labor.

The gradual return of dividends and buybacks indicates growing confidence in the broader economy. But companies that are in more trouble will likely hold off on reinstating theirs in favor of holding onto their cash, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. 

“You’ve got to worry about your business — your employees, your sales, customers, where people are going to work, whether you’re remote or not,” Silverblatt said.  

Here’s a list of companies that have laid off employees or permanently cut jobs during the pandemic and plan to return more cash to shareholders:

  • Accenture: The consulting firm said in late August it would lay off about 25,000 global employees, or about 5% of its total workforce. On Thursday, it announced it would expand its share buyback program by an additional $5 billion, bringing its total to $6.3 billion. 
  • Darden Restaurants: The company said Thursday that it will pay out a dividend of 30 cents per share to shareholders. That same day, the Olive Garden parent said it had cut 11% of its corporate workforce — or about 225 workers — as part of a restructuring plan.
  • Foot Locker: The retailer reinstated its dividend in August after just one missed payment. In July, Foot Locker laid off or relocated 179 employees of its Eastbay brand, according to a notice filed with Wisconsin’s department of workforce development. 
  • Guess: Earlier this month, the company reinstated its dividend. It also shared that it had permanently slashed its corporate headcount. Guess did not immediately respond to a request for comment from CNBC for more details on the job cuts.
  • Johnson Controls: In July, the auto supplier resumed its share buyback program. In its last two fiscal quarters, the company has reduced its workforce. A company representative declined to share more details on the layoffs.
  • Winnebago Industries: The RV-maker’s board approved a 9% increase to its quarterly dividend in August. In mid April, it laid off 79 employees. 

Source:

Related posts

TikTok no more: Amazon tells employees to delete app from phones with work email

InterNewsCast

Transfer Window Failings Latest Episode In FC Barcelona’s Historic Striker ‘Soap Opera’

InterNewsCast

Pelosi says continuity of government is ‘always in place’ after Trump tests positive for Covid-19

InterNewsCast

Leave a Comment