Aristocrat furloughs 1000, lays off 200 amid Covid-19

Australian gaming machine supplier Aristocrat Leisure will furlough 1,000 employees and permanently lay off another 200 to mitigate the impact of the novel coronavirus (Covid-19) crisis.

With land-based sales accounting for more than 60% of Aristocrat’s revenue, the business has been severely impacted by the crisis, as it must now focus on its digital division, which brought in the remaining 40%.

The business said that its 1,000 furloughed staff would be “principally in land-based sales, service and manufacturing operations” and primarily due to venue closures and “uncertain reopening timeframes”.

The business will make use of the JobKeeper employment subsidy in Australia for the “few hundred” stood down employees based there. However, the majority of this group is based in the US, where Aristocrat is “still working to determine its eligibility for other government programs and stimulus measures”.

The 200 permanent layoffs, meanwhile, are due to “changed priorities,” the business said.

“We are very sensitive to the impact of necessary cost reduction measures on our people, and will work hard to support them through this difficult time consistent with our ‘people first’ approach,” Aristocrat chief executive Trevor Croker explained. “We believe that these changes will help maximise opportunities for Aristocrat’s dedicated and talented people over the longer term.

“We will continue to do everything we can to restore momentum in our land-based business as quickly as possible recognising the importance of continuing to develop and deliver game content during this period.”

In addition to the furloughs and layoffs, Aristocrat will convert around 200 full-time roles to part-time, eliminate discretionary, consultant and contractor spend, and cut pay for about 1,500 remaining staff members by up to 20%. Board members will also have their pay reduced by 20%, while Croker's salary has been cut by 30%. 

“In line with Aristocrat’s values, the Group is supporting all affected employees, including with appropriate transition assistance and separation benefits, access to paid leave and preserving health coverage for US staff (in the case of stand-downs), counselling and assistance accessing government support where available,” the supplier said.

The business has also suspended its 2020 dividend.

Aristocrat said it is confident in its future prospects, as it has over $1bn in liquidity and no near-term debt refinancing requirements.

Last month, Aristocrat opted to withdraw its outlook statement for 2020 due to “softer demand” as casinos across the world close to reduce the likelihood of the virus spreading.

The business said it has been putting mitigation measures in place for months, as the virus has been affecting its Asian business for some time.