The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments Thursday related to the global economy, the work place and the spread of the virus.
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ALTERED STATE OF RETAIL: Retail stores are largely closed across the country and most of the people who worked in those shops have been laid off or furloughed. The pandemic has created a new normal in how people shop as well as what they buy.
— Target says its online sales have nearly tripled while store sales have declined in the mid-teens so far in April. The numbers, announced by the discounter Thursday, show how shelter-at-home orders nationwide drove customers toward the safer option of online shopping services including curbside pickup. Target’s move to limit the number of customers in the stores hurt sales at its locations.
Quarter-to-date, comparable sales, which include store and online sales, have increased more than 7%, reflecting a slight decline in stores and more than a 100% growth in online services And what is being prioritized is striking, but not surprising. Sales of food and beverages have jumped 20%, while sales of clothes and accessories have tumbled 20%.
— The Gap has stopped paying rents in North America and elsewhere where stores are closed and said Thursday that it may run out of cash to continue without an infusion.
“We will need to take additional actions to both preserve existing liquidity and seek additional sources of liquidity, beyond our currently available cash and credit facilities within the next 12 months,” Gap said in a regulatory filing.
EARNINGS SEASON:
— Hershey sales were helped, and hurt by the outbreak.
Baking supply sales — Hershey syrup, baking chips and cocoa — all jumped about 30% (check your Instagram account if you don’t know why). Gum sales have gone in the other direction, with social distancing knocking fresh breath down a few pegs on the priority list. Fewer people are making impulse buys in checkout lines.
Hershey withdrew financial guidance Thursday citing current events.
— Crocs expects a larger decline in revenues in the second quarter, anticipating that a majority of its retail and partner stores may be closed for the whole period. The funky shoe maker said it is comfortable with the cash it has on hand. Crocs has furloughed workers at its retail stores in North America and reduced pay for executives and board members.
— Sales at Unilever are flat as falling sales of ice cream and other foods are offset by soaring sales of cleaning materials.
AIRLINES: Airlines are facing a financial crunch as the virus brings nearly all travel to a halt.
— The CEO of Dutch airline KLM has taken a 20% pay cut until the end of the year.
Pieter Elbers said Thursday he is taking the cut in his fixed salary as the crisis batters the company, which is reportedly seeking a multibillion-euro financial lifeline along with Air France from the French and Dutch governments.
KLM previously announced that there will be no pay rises for its board this year and postponed payment of 2019 bonuses. Board members also waived their right to bonuses this year.
— An airline trade group says the pandemic poses a greater financial risk and job losses than previously believed for carriers in Europe, the Middle East and Africa, and it wants more aid from governments. The International Air Transport Association said travel restrictions could cost European airlines $89 billion this year, up from a March estimate of $76 billion, and Middle Eastern and African airlines $30 billion, up from $23 billion.
— The Indonesian government is suspending all domestic and international passenger flights starting Friday to June 1. The ban applies to all travel services, both commercial and charter.
— Thai aviation authorities have issued COVID-19 prevention guidelines for airlines if they plan to resume domestic services on May 1.
The Civil Aviation Authority of Thailand announced disease control measures that include ticketing only every other seat, maintaining social distancing for check-in, boarding and disembarking and leaving the last row of seats empty for isolating passengers with suspicious symptoms developed in flight.
Cabin crews must wear masks, gloves, and face shields while the passengers must bring their own masks to wear at all times. Food and drink won’t be provided and passengers may not bring their own for consumption during the flight.
MARKETS: The Dow, S&P 500 and Nasdaq are down between 2% and 3% for the week after a dismal two days of trading, but all are up more than 20% over the past 30 days.
— U.S. stocks pushed higher in midday trading, even after the government said 4.4 million people filed for unemployment benefits last week as layoffs sweep the economy.
SHAKEN, NOT DETERRED: Auto plants in the U.S. remain shut down with no solid date set for production to restart. Plants elsewhere are making plans to begin again.
— The car made famous by James Bond will reopen two of its British factories. Aston Martin Lagonda will resume production at the St. Athan plant in south Wales, which employs about 300 people, on May 5. A second Aston Martin factory at Gaydon will reopen at an unspecified date.
