The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments Monday related to national and global response, the work place and the spread of the virus.
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EARNINGS SEASON: The damage from the pandemic is playing out in quarter earnings reports, which have begun to capture the earliest days of the outbreak. Quarterly growth has plunged 13% for S&P 500 companies that have reported, according to S&P Global. Most companies have withdrawn all financial guidance for the year given the unprecedented disruption to the economy.
— Under Armour’s sales fell 23% in the first quarter, with 15% of that decline related to the impact of the virus outbreak. The report Monday dragged down a bunch of other clothing makers including Hanesbrands, PVH, Tapestry and Capri.
— If there is any potentially good news for the crippled hotel industry, it can be found in China. Marriott, like other lodging companies with operations in China, said Monday that business there is starting to come back. Still, Marriott’s revenue per available room dropped 22.5% and it slashed its expectations for this quarter.
— Cosmetics company Coty reported a surprise loss Monday, but it also received some desperately needed cash. The private equity firm KKR & Co. is investing $750 million in Coty Inc.
UNCERTAIN FUTURE: Companies from all sectors are trying to find a path out of the pandemic, and it’s faltering. Neiman Marcus and J.Crew have already filed for bankruptcy protection, along with a smattering of energy companies. Hundreds more are expected.
— Stage Stores filed for Chapter 11 bankruptcy protection Monday. The company said it will simultaneously solicit bids from those seeking to keep operations going, and from those that want to buy its assets. The chain will reopen some stores in the coming weeks to liquidate its inventory. It will start reopening stores to the public Friday and anticipates having all stores open by June 4.
— Shares of Chesapeake Energy slumped in Monday trading after the company said in a regulatory filing that “management has concluded that there is substantial doubt about the company’s ability to continue as a going concern.” Demand for energy has plummeted during the outbreak, driving prices for crude and natural gas sharply lower.
HOUSE FIRE: The sale of a house requires a lot of face-to-face contact, from property showings to contract signings. The inability to continue business has usual has quashed real estate sales.
— PulteGroup’s net new orders plunged 50% in April compared with last year. The company is cutting about $100 million in costs on an annualized basis through furloughs and other initiatives. A portion of compensation for senior executives and board members is being redirected to an employee assistance fund.
— When the U.S. reports the number of new home construction projects underway next week, economists expect a 22.3% plunge.
GOVERNMENTS & CENTRAL BANKS: Countries are trying to re-open their economies and limit economic damage. The results have been mixed.
— The French began leaving their homes and apartments for the first time in two months without permission slips. Clothing stores, salons and other businesses reopened.
— Gyms in Germany’s most populous state are reopening. Some fitness clubs in North Rhine-Westphalia opened shortly after midnight to let gym-starved customers build up a sweat again.
— Greece entered the second phase in lifting its lockdown, with all remaining retail stores that had been shut down in March allowed to reopen. Shopping malls and department stores remain shut.
— Shopping malls, barber shops, hairdressers and beauty salons have reopened in Turkey for the first time in seven weeks. Food courts, movie theaters and children’s play areas will remain closed.
SNACKS & PANDEMICS: Self isolation has changed what and where people eat and drink. Companies that had struggled because of changing tastes are back in favor with people seeking comfort foods.
— General Mills is raising its full-year sales forecast after seeing unprecedented demand as million stocked pantries ahead of and during lockdown. U.S. retail sales for the maker of Cheerios, Haagen Daz and Gold Medal flour, jumped 45% in March and 32% in April. The company says it will exceed its sales and profit forecasts this year.
— PepsiCo launched two web sites to sell snacks and drinks directly to consumers. PantryShop.com offers curated kits for $29.95 or $49.95; a workout kit contains Gatorade protein bars, Muscle Milk protein shakes and Propel water with electrolytes, for example. At Snacks.com, you can get Frito-Lay snacks. Most orders are arrive in two days.
Sales of soft drink syrups, a major business, has been cut off with restaurants and sporting and music venues closed.
MARKETS: — Stocks are dipping on Wall Street Monday and giving back some of the strong gains from last week.
