Virus Outbreak California
The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments Wednesday related to central governments, the work place and the spread of the virus.
— A memo from the CEO of long-haul carrier Qatar Airways that was was leaked online suggests upcoming layoffs will be “substantial.” The airline has not said publicly how many jobs will be lost.
The email said layoffs would include cabin crew. The Doha-based carrier is one of the three major airlines in the Persian Gulf region created to capitalize on East-West travel.
PREPARING FOR AFTER: Companies, countries, cities and towns are in varying states of recovery from the first wave of the coronavirus.
— Germany has cleared the way for restaurants and remaining shops to reopen in the coming weeks, but it will put restrictions back into place if new infections exceed a predetermined number. Infections have declined significantly in recent weeks.
— Russia is reopening all industrial plants and construction sites in Moscow next week. President Vladimir Putin said Wednesday that it will be up to officials in other regions to determine if it’s possible to ease lockdown measures that have been in place since the end of March. Russia has registered 165,929 coronavirus cases, including 1,537 deaths.
— Italian Premier Giuseppe Conte said in a newspaper interview Wednesday that a new government decree will stimulate the construction industry by offering tax credits for bringing buildings up to seismic standards and release funds to renovate Italy’s schools and simplify bureaucracy for public works projects.
— The U.S. Treasury is reporting massive amounts of borrowing.
TACOS, PIZZAS, BURGERS: Restaurants are rethinking operations as they emerge from the outbreak. The index that follows restaurants and hotels has plunged 27% in the past three months, among the worst in the SP 500.
— Sales at comparable stores have improved “significantly” since April at Pizza Hut, KFC and Taco Bell. The company that owns the chains, Yum Brands, says same-store sales had tumbled 30% in the second half of March and into April with 20% of its restaurants closed.
— Wendy’s sales improved after it began serving breakfast again and then partnered with Uber Eats and GrubHub. The chain’s same-store sales jumped 16% in the first week of March after it reintroduced breakfast. As lockdowns began, sales plummeted; they were down 28% the first week of April. But they’ve improved every week since then and were down only 2% in the U.S. last week. Wendy’s says increased delivery orders are helping.
EARNINGS SEASON: Companies are offering the first look at the damage from the outbreak, though it's an incomplete picture. Tech is seeing the greatest growth, but the category that includes consumer sales has plunged nearly 50%, the worst of any sector, according to S&P Global.
— Mattel is warning of sales declines larger than the 14% tumble it reported Wednesday for the first quarter. The company is counting on a new line of Baby Yoda dolls to goose Christmas sales, but the company's CEO said production won't be ramped up unless there is evidence that consumers are spending money again. Rival toy maker Hasbro has also warned of falling sales in the current quarter.
— The coronavirus outbreak has been a back breaker for some fitness companies, while helping pump up others. Exercise bike and treadmill company Peloton Interactive notched a 92% increase in subscription revenue for the January-March quarter as more people stuck at home signed up for the company’s virtual exercise classes.
Litigation costs kept Peloton from turning a profit, but its revenue soared 66% to about $525 billion. In contrast, health club operators are struggling. Gold’s Gym filed for Chapter 11 bankruptcy protection earlier this week. Last month, Planet Fitness furloughed employees at locations it directly controls.
— The New York Times added 587,000 net new digital subscriptions in the first quarter.
MARKETS: Markets have been roiling for three months because of uncertainty over the duration of the outbreak. The S&P 500 is down 19% in that period. All major U.S. indices are up for the week, however.
— Stocks fell on Wall Street Wednesday, as depressing data on the economy continues to roll in.
TEAM CARB: Sales of electric pasta makers are five times greater than they were last year between mid-March and mid-April, according to the NPD Group, and sales of bread-making machines have quadrupled. There was double-digit growth in sales of waffle irons, electric griddles and rice cookers.
CLEARING THE AIR: The virus-caused plunge in air travel is reducing airlines’ carbon footprint. Figures released Wednesday by the Energy Department show U.S. airlines burned 1.17 billion gallons of fuel in March, 23.5% less than the same month last year. It’s the lowest fuel-burn rate since February 2014.
VACANCIES: U.S. hotel occupancy improved slightly last week as leisure demand picked up in Texas and Florida. The average occupancy at U.S. hotels was 28.6% the week ending May 2, according to STR, a data and consulting firm. It was the third consecutive week-to-week increase in demand.