COVID-19 UPDATE

To our Beauty Community,

We hope that you and your loved ones are staying healthy and safe during this challenging time. I am writing today to share the steps and tough decisions we have made to ensure our business is prepared to navigate this environment and strengthen our ability to ultimately welcome our beauty community back to our stores. Earlier, we had relayed that our stores would be closed through Friday, April 3. They will now remain closed until we can responsibly welcome back customers and staff, based on guidance from public health authorities.

We believe keeping stores closed is the right thing to do, but it means we have to make changes to our business, while keeping our employees informed of what the changes mean for them. Like many retailers with an extensive physical store business, there are tough decisions to be made to adapt to an unprecedented and uncertain environment.

In the US, we have made the difficult decision to let go a portion of our part-time and seasonal store employee base. The impacted employees are ones who have been with our company for a short tenure and worked limited hours. They have all been offered severance and provided with resources to support their transition, including coordination with companies that provide essential services and may be hiring at this time. It’s our sincerest hope that we are able to bring them back on staff in the near future. For our 9,000+ remaining US store employees, which represent the vast majority of our total US employees, we have been able to ensure they will be paid 100 percent based on average hours worked and existing health benefits through late May or until our stores re-open, whichever happens sooner. This includes all of our full-time store employees and licensed Beauty Advisors.

To support these decisions, we have implemented measures across the business and at our corporate headquarters to responsibly manage costs and ensure resources are going toward our people whenever possible. We have also made a significant incremental contribution to our Sephora Stands Together Fund, which provides emergency financial assistance to employees in need.

We believe these actions taken together will support the long-term health of our business, protect our people and preserve our ability to reopen our stores when that time comes.

Thank you again for your loyalty and support.

Sincerely,
Jean-André Rougeot President & CEO, SEPHORA Americas

FAQ: updated as of April 15 with additional information.

What percentage of Sephora’s employees were impacted by this announcement? Were all part-time employees laid off?

We made the very difficult decision to let go of less than half of our part-time and seasonal store employees. In total, we have kept 70% of Sephora’s US store employees (full- and part-time) and more than 80% of Sephora’s overall US workforce on staff. All employees who depend on Sephora for health benefits were retained.
This was a decision that we never wanted to make, and we recognize the effect this will have on impacted employees’ lives. It is our sincerest hope that we will be able to rehire these individuals in the future.

Will Sephora’s remaining U.S. store employees continue to receive their full pay?

Our 9,000+ remaining US store employees, who represent the vast majority of our US workforce, will receive 100% of their normal base salary and all of their existing health benefits through late May or until our stores reopen, whichever happens sooner. This includes all of our remaining full- and part-time store employees and licensed Beauty Advisors.

What resources did Sephora provide to impacted store employees?

We have offered all impacted employees a severance package to bridge the gap to unemployment assistance, if they choose to file.
Additionally, we have set up a resource library where they can access a range of information, including transition support, a list of companies hiring 10,000 or more employees, tips and tools for landing their next job (outplacement services), and other useful information to provide as much support as possible during their transition.
Once our stores are in a position to begin conversations around rehiring, we will be reengaging with impacted individuals who are interested in rejoining the Sephora team.

Can impacted employees still apply for unemployment insurance if they accept the severance package?

Yes. All impacted employees are eligible to apply for unemployment benefits, and accepting the severance package Sephora offered does not affect their eligibility to apply. Ultimately, the state in which an employee resides will determine whether or not an individual is eligible to receive unemployment benefits.
Employees should call their local unemployment office or visit their state’s unemployment website (for example, if you live in California, you can search “California Unemployment Insurance”) for instructions on how to file for benefits.

What about your stores in Canada? Any impact there?

Canadian stores will also remain closed until we can responsibly welcome back customers and staff based on guidelines from public health authorities.
For our Canadian store teams, we will retain all full-time and part-time employees. However, in accordance with the changes we made to our US store staff, during the store closure all Canadian store employees will temporarily receive 80% of their base pay but will continue to receive 100% of their existing health benefits through late May or until stores reopen, whichever happens sooner, and we will reassess at that point.
Corporate employees in Canada will observe a reduced work schedule of 32 hours per week and the same pay reductions as our Canadian store employees during this period.
Employees may elect to use part of their accrued vacation to mitigate the effect of these measures.

Why did Sephora take different actions in the US and Canada?

We have extended our store closures in both the US and Canada. However, our specific decisions were different in each country in order to adhere to different regional employment laws.
In Canada, both corporate and store employees are taking a 20% pay cut. Employees may elect to use their paid time off (PTO) to reach 100% of their salary. In the US, both corporate and store employees will take a six-day mandated PTO, which is the equivalent of approximately 20% of salary during the store closure period.

Why did you decide to lay off these employees, as opposed to furloughs?

First, it is our sincerest hope that we will be able to rehire these individuals in the future.
With all of the uncertainty right now, we have no firm timeline on exactly when stores will reopen or what our ability to rehire will be at that time. We chose a course of action where we could be upfront and transparent with impacted employees, offer severance, and open the door for employees to seek other immediate work.
When companies announce furloughs, there is no guarantee that the furloughed employees will be brought back on payroll; furloughs can be extended, or the position may ultimately be eliminated after a furlough period ends.

What measures have you taken at a corporate level to proect the business?

Our corporate offices have implemented a profit protection plan to conserve resources and focus on the essentials that are needed to drive our business in today’s environment, including delaying a majority of our planned new store openings and streamlining marketing and IT initiatives.
All US store and corporate employees, including executive leadership, will be required to take a six-day mandated PTO. This is the equivalent of approximately 20% of salary during the shutdown.
Corporate employees in Canada will observe a reduced work schedule of 32 hours per week and the same pay reductions as our Canadian store employees during this period.
Further, we have made a significant incremental contribution to our Sephora Stands Together Fund, which provides emergency financial assistance to both store and corporate employees in need.

What are your plans for your e-commerce business and distribution centers?

Our e-commerce business currently remains operational.
We have implemented every health and safety measure recommended by the CDC, as well as additional safeguards, to promote a safe and productive environment in our distribution centers. This includes contactless temperature checks for distribution center employees before they begin working and having teams work in small-group pods to reduce social contact across the center and quickly identify, if necessary, employees who have been in contact with each other.
In some cases, these health and safety precautions result in fewer people than usual processing orders at one time. With that in mind, we appreciate our customers’ continued patience if they should experience a delay in their shipment. Our teams are working as quickly and safely as possible to get orders out.
Additionally, beginning March 23, we increased pay by $2 per hour worked for all distribution center employees, and this will continue until stores reopen.
We will continue to waive standard shipping fees until stores reopen and are committed to serving customers on our app and e-commerce sites.