Hair Cuttery's Owner Expects to Miss Payroll on Tuesday -- Update
April 06 2020 - 6:03PM
Dow Jones News
By Charity L. Scott
One of the largest hair-salon companies in the U.S. said it
can't afford to make payroll on Tuesday, more evidence of just how
swiftly and severely the coronavirus pandemic has damaged
businesses big and small.
Ratner Cos., which owns Hair Cuttery and other salon brands, has
more than 700 locations and employs thousands of stylists. Hair
Cuttery closed all of its locations on March 21 but still owes many
workers for shifts they worked before it shut down.
In a video to staff, executives said the closely held company
simply doesn't have the funds to make payroll on April 7 and is
unsure when it might receive any assistance from the U.S.
government. While employees in some states have received some pay,
Ratner doesn't have enough to issue paychecks to the rest of its
workers.
"I know this is devastating news to hear," President Phil
Horvath said in the video, referring to the news the company
wouldn't pay employees what they had earned. "We took this extreme
measure to ensure the survival of the company."
The Vienna, Va., company had borrowed funds to make its previous
payroll payments on March 24 and had used any money that came in
until the stores closed to pay for health-insurance premiums for
the month of April, Mr. Horvath said. He said the company intended
to pay staff what they are owed once it secured additional
funds.
Ratner said it planned to seek assistance from the federal
government but said it still was still waiting to learn details
about the Cares Act, which created lending programs for small and
large businesses.
"We don't know how much we'll get, when we'll get it or what we
have to do to get it," Mr. Horvath said. The company didn't
immediately respond to requests for comment.
The Federal Reserve has said it plans to launch a program,
called the Main Street Lending Facility, that will help aid
businesses that are too large to qualify for help from the Small
Business Administration and too small to receive aid from lending
facilities the Fed is creating for large, highly rated
corporations.
The $2.2 trillion economic-relief package Congress passed last
month directed the Treasury to work with the Fed on establishing a
facility aimed at smaller firms, as well as states and
municipalities, and provided $454 billion to the Treasury to
backstop the Fed's losses.
Fed and Treasury officials are still finalizing the details of
the program, and haven't said how it would be structured or which
firms would be eligible.
Cynthia Cole, a stylist at a Hair Cuttery location in Frederick,
Md., said she found out on Friday she wouldn't be paid the roughly
$700 she is owed in her paycheck Tuesday. Previously, workers were
told that their paid-time-off requests wouldn't be honored, so many
stylists chose to keep working until the salons were closed on
March 21.
"We were trying to get everyone in before our doors did shut, so
we were actually really busy at our salon," said Ms. Cole, who was
furloughed and filed for unemployment benefits.
Company leaders issued new rules around how the staff should do
their jobs in the midst of the coronavirus outbreak. "They gave us
guidelines not to do beard trims, not to do waxing, and to work at
every other station, which didn't make sense to me because we were
still not six feet away from our clients," Ms. Cole said.
"Toward the end, people started getting scared of working," she
added. "But since they weren't closed down, they knew that they
would have to go in -- in order to get a paycheck that apparently
they're not even receiving."
Ratner, which competes with publicly traded Regis Corp., had
been struggling before the coronavirus outbreak swept through the
U.S. Ratner said in January it was closing about 10% of its salons,
citing increasing competition and rising operating costs.
"I'm truly sorry and heartbroken over how this has affected all
of you, all of us," Ratner founder Dennis Ratner said in the video.
He and his wife started the company with a single salon in 1974.
"Unfortunately, the business was in a challenged-yet-improving
state before we had to shut down. It's so devastating to be where
we are today."
--Kate Davidson contributed to this article.
Write to Charity L. Scott at Charity.Scott@wsj.com
(END) Dow Jones Newswires
April 06, 2020 17:48 ET (21:48 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.