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US retail store closures to drag into April, likely longer

by DE TEAM on March 28, 2020

March 27.

This Friday was the day that many retailers set roughly two weeks ago as the marker for how long they planned to temporarily keep their shops closed. But as the number of COVID-19 cases continues to rise, nothing is opening back up again.

Not even close.

For some, this might not come as a surprise. Many of these companies likely set the initial end-of-the-month date because they knew they could at least pay workers for two-weeks time, verbally committing to do so, and they had already paid their landlords March rent.

Now, heading into April, we are in uncharted territory. Where the industry goes from here will depend on many factors, as the announcements from a number of retailers illustrate.

Nike and Lululemon both reported quarterly earnings this week and said that as stores in the U.S. remain closed for the foreseeable future, their plans to reopen will be on a location by location basis, according to local mandates and information provided by the government.

Lululemon CEO Calvin McDonald said Thursday that the company is preparing for its shops in the U.S. to be closed for longer than they were in China, where COVID-19 originated.

“In part, when we do look at China, I do think it will help inform how North America and Europe will come back trading,” he told analysts. “But I do think the scenarios are slightly different, and that China had a quick, two-week closing period when the stores were then reopened.”

“In North America and Europe, we’re planning on a longer closed period,” the CEO said, not providing other details as to why this is the case.

Nordstrom on Wednesday said it would be extending its store closures in the U.S. and Canada through at least April 5. It is also beginning to furlough a portion of its corporate workforce, starting April 5 for six weeks.

Tailored Brands, the parent of Men’s Warehouse and Jos. A. Bank, said Thursday that its keeping all of its stores dark until at least May 4. The company said it is, in the meantime, furloughing all U.S. store workers and a “significant portion of employees” in its distribution centers and offices. It did not quantify how many people will be impacted.

Glasses maker Warby Parker sent a memo to customers on Thursday saying it will now be keeping its stores shut “until it is responsible to reopen.”

“We have communicated to our team that every retail employee will be paid, at a minimum, through the first four weeks of this store closure,” co-CEOs Neil Blumenthal and Dave Gilboa said. “Our retail employees will continue to be paid and receive benefits for as long as possible without endangering the long-term viability of the business and causing the elimination of jobs in the future.”

“Mall traffic looks set to change forever, and working from home could become sticky,” Jefferies analyst Randy Konik said in a note to clients this week. “We see real demand … issues ahead for retail, which puts many retailers at risk and could push stocks back down.”

“The more stores are closed, the more demand is curtailed during those actual closures, but it also changes consumption patterns more and more to internet spend,” Konik added.

The temporary closures will likely lead to more permanent ones. With the coronavirus as a new wrench in their businesses, the U.S. retail industry could see a record year for announced closures, amounting to 15,000, one analyst has predicted.

Extended store closures will also lead to more furloughs, which is a temporary leave of employees, and then ultimately layoffs.

Victoria’s Secret and Bath & Body Works parent L Brands said Friday that its stores in the U.S. and Canada will remain closed beyond the end of March. It said it will pay workers through April 4. But, beginning April 5, it will be furloughing “most” store workers, in addition to those people who cannot work from home or those who are not supporting L Brands’ e-commerce operations.

“As the situation continues to evolve rapidly, L Brands is not currently able to predict the timing of store reopenings,” the company said.

Build-A-Bear Workshop said Friday that it will be furloughing more than 90% of its workers, effective this Sunday. Fitness chain Flywheel Sports has temporarily laid off 98% of its workforce.

“We are still trying to get our arms around the situation,” David Silverman, a senior analyst on Fitch Group’s retail team, said in an interview. “We are trying to understand what a new base case looks like. This is an unprecedented situation.”

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Stimulus package: Gig economy independent contractor benefits would change drastically with coronavirus bill

by DE TEAM on March 27, 2020

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These Retailers Refused To Close During The Pandemic, So An Illinois City Shut Them Down

by DE TEAM on March 26, 2020

All kinds of companies have been claiming they provide an “essential” service to the public during the coronavirus pandemic, so they can stay open despite a mounting number of stay-home orders from state and local governments. They include arts-and-crafts chains JoAnn Fabrics and Michaels and the video game seller GameStop.

The refusal of those retail chains to close their doors for the sake of public health has enraged employees and customers who believe their services are anything but essential. One small city in Northern Illinois actually did something about it.

A spokesperson for the McHenry, Illinois, police department confirmed to HuffPost on Wednesday that in recent days it has served cease-and-desist orders against JoAnn Fabrics, Michaels and GameStop, telling the retailers they were violating the stay-home order issued by Gov. J.B. Pritzker (D).

“We did a couple of compliance checks after the governor put in his executive order, and then we did serve them with cease-and-desists after they failed the compliance checks,” said Patrick Polidori, public affairs officer for the McHenry Police Department.

A call to the JoAnn store in McHenry went to a voicemail that said, “Following local government and health officials, our store is currently closed.” A call to the local GameStop went unanswered. A worker who answered the phone at the Michaels location said it was now closed.

Public health experts have warned that people need to maintain a safe distance from one another to limit the spread of the coronavirus. Government officials have cautioned against large gatherings and asked anyone capable of teleworking to do so. Businesses that aren’t essential and require close contact between people have been told to cease operations in several states.

The stay-home rules vary from one jurisdiction to the next, but they tend to follow the Department of Homeland Security guidelines for “critical infrastructure” sectors during an emergency. Examples of critical infrastructure are health care, communications, transportation, banking, and food and agriculture. Companies can keep operating if they meet the criteria.

HuffPost readers: Have you been working at JoAnn Fabrics or Michaels during the coronavirus pandemic? Email our reporter about it.

HuffPost obtained a letter that JoAnn stores provided to workers to show police in the event they are stopped heading to or from work during a stay-home order. In it, the company says JoAnn is essential because it sells products that help people work from home and because its materials are being used to construct masks and other personal protective equipment needed now. The chain has been giving away some materials to be made into masks and gowns for hospitals.

As HuffPost reported Tuesday, Michaels stores have remained open in several states with stay-home orders in place. In a letter to employees, the company cited three reasons why its stores are “essential”: Small businesses rely on them, teachers use them for educational supplies and people “are looking to take their minds off a stressful reality” right now.

GameStop had given its employees a similar letter saying its products help people work from home. After heavy criticism, the company decided to close all its stores to foot traffic as of this past Sunday. The cease-and-desist letter issued in McHenry would have preceded that decision.

Many workers have told HuffPost in recent days that they do not believe their companies provide essential services even though those businesses continue operating. They fear they are endangering their colleagues and customers by working through the pandemic.

“I love my job and what I do,” one worker told HuffPost on Tuesday. “The problem I have here is, is it moral to keep us working?”

A HuffPost Guide To Coronavirus

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From Shutdown to Coronavirus Phase Two

by DE TEAM on March 25, 2020

Our editorial last week on the costs of our government-mandated national economic shutdown struck a chord with readers, including perhaps at the White House. President Trump is now saying he wants the country back to normal by mid-April. While this is right as a direction, the shift to a sustainable health and economic strategy will require a transition and a credible explanation to the public.

The initial 15-day national period of mass social distancing ends Monday, which is a chance for reconsidering the anti-virus shutdown strategy. The challenge will be finding a balance between protecting against the virus and resuming commerce and business that is crucial to getting people back to work.

The current at-home quarantines across the country are buying time to slow the coronavirus spread, as well as to surge masks, protective equipment and ventilators to hospitals and hot spots. This hospital surge is crucial to saving lives and reassuring the public that America’s cities aren’t on a path to Italy’s scenes of tragic triage. New York, Seattle and perhaps New Orleans will have to cope in coming days and weeks with hundreds and perhaps thousands of critically ill Covid-19 patients. Americans will want to know how a sustainable strategy prevents similar scenes around the country.

Mr. Trump and other leaders will also have to be candid about the limitations of what we know. Because of the lack of widespread testing, we don’t know how many people are infected with few or only mild symptoms. This information would help us get a better fix on the real death rate, not least by group and health status, and thus to know how under siege our hospitals will be over weeks and months. More accurate testing data will also reassure the public.

Some degree of social distancing and self- or mandated quarantines will also have to continue. This is especially true for the elderly and those who are immuno-suppressed. The public education on those points can’t let up.

The health experts will have a vital role here, especially when it comes to different distancing regimes by region or by demographic group. The public-health goal is to limit the virus spread now and later this year if there is still no vaccine or better treatments. The public-education goal is to assure Americans that we can reduce the virus threat even as millions of Americans return to work.

***

But sooner rather than later, Mr. Trump and governors will have to explain the huge human and economic cost of continuing the shutdown. Those costs will start to appear Thursday when initial jobless claims are likely to record one of the biggest one-week leaps in history. They will rise by the millions as the shutdown goes on.

Congress may ease some immediate pain if it passes the Senate’s $1.8 trillion spending bill this week, but no amount of public money can compensate for the trillions of dollars in lost private employment and production. Low-income workers who had recently begun to see wage gains will suffer the most. These workers need employers back in business and finding customers and revenues again. Government loans can only maintain these businesses for so long, and even then they will burden the companies with more debt for years.

The human cost will be the greatest. The economic and social-science literature is replete with studies that document the harm to people from recessions and economic hardship—including higher rates of suicide, opioid abuse, alcoholism and domestic violence.

A Lancet study found “4,983 excess suicides” between 2007 and 2009 (that is, before and during the recession) based on population and economic data from 2000-2011. A 2013 study in the BMJ medical journal found similar suicide increases, especially in men: “Rises in national suicide rates in men seemed to be associated with the magnitude of increases in unemployment, particularly in countries with low levels of unemployment before the crisis.”

A 2019 study in Clinical Psychological Science found “individuals who had experienced even a single financial, job-related, or housing impact during the recession still had higher odds of symptoms of depression, generalized anxiety, panic, and problematic substance use 3 or 4 years after recession had ended.” And a St. Louis Federal Reservestudy in 2013 found that drug-abuse rates were 10 points higher among the unemployed.

***

None of this will surprise readers who have watched friends or loved ones spiral down after a bankruptcy or job loss. The point here is that the policy tradeoff for Mr. Trump and the governors isn’t between saving lives and a higher stock market, as our editorial’s critics asserted. And it isn’t a choice between pandemic expert Anthony Fauci and economists in the White House. There is great public-health damage from both the virus and from mass unemployment and recession.

The challenge for political leaders is to consider both and make decisions in the larger national interest. This is what Mr. Trump means when he tweeted Tuesday, in his unsubtle fashion, that “We can do two things together. THE CURE CANNOT BE WORSE (by far) THAN THE PROBLEM!”

The urgent choice isn’t pitting public health against financial health. Both matter, and the latter is essential to the former. The country needs a sustainable strategy for both.

Wonder Land: Epidemiologists’ strategy to combat the coronavirus is wide scale shutdowns, or social distancing; an idea derived from measures taken during the 1918 flu pandemic, which survivor William Sardo, Jr. described before his death in 2007. Images: AFP/Getty Composite: Mark Kelly

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What people are buying during the coronavirus outbreak and why

by DE TEAM on March 24, 2020

Young Man shopping in a supermarket, breathing through a medical mask.

RealPeopleGroup

In the weeks since the U.S. confirmed its first case of COVID-19, consumer habits have been shifting.

Medical masks, hand sanitizer, gloves and toilet paper have flown off shelves in the U.S., as more people began to look to protect themselves and prepare for long stints isolated in their homes. But, those aren’t the only items that consumers are spending money on in stores and online.

In addition to medical supplies, such as cold medicine, thermometers and tissues, and items for the pantry, such as canned goods and bottled water, people have begun shelling out money for entertainment. Board games, puzzles and video games have become popular items.

According to Kit Yarrow, a consumer psychologist, people are currently purchasing items based on three needs: to protect, to entertain and to connect.

“First of all there are our practical needs,” she said. “We are home more, so we need more food and we need more provisions.”

Canned goods, bottles of water, frozen food, rice and pasta have been cleaned off shelves in recent weeks and grocery stores have had to work quickly to replenish their supply.

Yarrow said that the hoarding of food items makes sense psychologically. As humans feel threatened or anxious, our first instinct is to gain some sort of control over the situation.

“People are resorting to the only action they feel like they can, which is stockpiling,” she said.

Supermarket shortages caused by panic-buying of items such as pasta and rice.

Andrew Merry

And it’s not just for ourselves. Yarrow said that some people who have to care for children, their own parents or animals are being driven by a sense of guilt to hoard more items.

“It’s guilt avoidance,” she said. “‘I better get more than I need because the consequences if I don’t are too horrible to imagine.'”

No one wants to run out of food or cleaning supplies while trying to take care of others, she said.

In addition to food supplies, people have been purchasing gloves, soap, diapers, water filters and jugs, bidets and painter’s tape, according to data analysis by Thinknum of Amazon sales from late January through the second week of March.

“I think people are anxious and people feel that this an unsafe world right now,” Yarrow said.

It’s why they have begun stockpiling items that protect against the virus, as well as items that would protect them against other people; there has been a rise in purchases of security cameras and guns.

“Unsurprisingly, nondiscretionary or essential categories such as food, household products, personal care and health products saw the biggest jump,” Deborah Weinswig, CEO and founder, Coresight Research, wrote in a research note Friday about the impact of the coronavirus on consumers.

“More than one-third of all respondents reported buying more food and/or more household products,” she said of Coresight’s survey of more than 1,000 people March 17-18.

Once folks feel like they are physically safe — have enough food and protection — there is a shift to buying items that are more geared toward emotional well-being.

It’s time to entertain and connect

One of the top sellers on Amazon in the last month has been board games and jigsaw puzzles, according to Thinknum. In particular, Sorry, Jenga, Connect 4 and Clue, which all happen to be Hasbro-owned games.

Hasbro CEO Brian Golder told CNBC on Monday that the company is experiencing strong demand during the coronavirus pandemic.

“Overall we are seeing great demand in our products,” Goldner said on “Squawk Box.” “In fact, our supply chains are back up and running in China,” he added.

Goldner said demand for Hasbro’s games, such as Monopoly and Operation, and Play-Doh have been particularly strong. He said the company is also planning new products in response to the widespread stay-at-home directives being issued across the country.

Shares of Hasbro closed up more than 12% on Monday but are down about 50% since January. The stock has a market value of about $7.1 billion.

Yarrow said in addition to traditional entertainment such as family games, video games, TV and movies, people have also been gravitating toward crafting and baking to keep themselves busy.

“People have to find stuff to do,” she said. “Some of it is game consoles and stuff like that, but a lot of it is people going back to home crafts. Stuff to keep themselves amused, but in a solitary way.”

She said yeast has been surprisingly popular and selling out at stores because people have been making more bread at home. Other crafts include embroidery and knitting.

Others have opted to order yoga mats and resistance bands, among other health and fitness items, Thinknum found. Since gyms are closed, people are having to get more creative about their exercise routines.

Yarrow also said that more people have been purchasing condoms.

Consumers are also gravitating more toward technology that allows them to connect with people that they aren’t able to physically interact with. She pointed to companies such as Zoom, which have seen a surge not only in consumer interest but also in investor interest.

Shares of Zoom, a video platform designed for conference calls, have skyrocketed more than 125% since January and were up nearly 20% on Monday.

“We are learning new ways of connecting with each other through technology,” Yarrow said.

“There is nothing more fundamentally important in our life than connecting with other people and here in this time when we are so anxious and need each other more than ever and we aren’t supposed to be together,” she said. “It’s the human imperative. We are going to find ways to be together.”

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Cisco commits $225 million to battle coronavirus, leading tech’s fight against the pandemic

by DE TEAM on March 23, 2020

Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.

Cisco plans to dedicate $225 million in cash and services to support various causes dedicated to combating the spread of the coronavirus and helping those affected.

“Cisco must, and will, do even more to help others respond to this global pandemic,” said Cisco CEO Chuck Robbins in a blog post published Sunday evening.

The investment, which includes $8 million in cash and $210 million in products, will be dispersed to a variety of groups including the United Nations Foundation’s COVID-19 Solidarity Response Fund and the World Health Organization’s various coronavirus efforts.

“People who were already vulnerable are facing even more risks to their health, stability, housing, and well-being,” Robbins wrote. “Nonprofits are struggling to serve their populations as the number of volunteers declines due to social distancing practices and donations are at-risk due to financial concerns.”

The networking giant will also provide funding for unspecified “heads of state, government agencies, and businesses to rapidly deploy COVID-19-related technology solutions,” Robbins wrote.

According to Robbins, Cisco is helping to secure over 2.2 million people online to date, and Webex, the company’s video conference and online collaboration tool, has facilitated the virtual response meetings for the French, Canadian, German, Colombian, and other governments around the world.

Cisco, along with other unnamed companies, will also announce on Monday a multi-million-dollar financial assistance program for at-risk people, Robbins said.

“With support from Santa Clara County Supervisor Cindy Chavez, San Jose Mayor Sam Liccardo, and Destination: Home’s CEO Jen Loving, we will be able to rapidly support low-income individuals during this time,” he wrote.

Cisco’s announcement comes after various tech companies and figures have announced their efforts to combat the spread of the virus and support overwhelmed medical professionals worldwide.

Amazon was among the earliest to respond, announcing on March 10 that it would create a $5 million grant to help small businesses in the Seattle area that were affected by the coronavirus.

A week later, Jack Ma, the CEO of Chinese e-commerce and cloud computing giant Alibaba, pledged to donate emergency supplies to various countries in Asia that have been severely impacted by the coronavirus.

Go Asia! We will donate emergency supplies (1.8M masks, 210K test kits, 36K protective suits, plus ventilators & thermometers) to Afghanistan, Bangladesh, Cambodia, Laos, Maldives, Mongolia, Myanmar, Nepal, Pakistan & Sri Lanka. Delivering fast is not easy, but we'll get it done!

— Jack Ma (@JackMa) March 21, 2020

Microsoft CEO Satya Nadella described in a LinkedIn post on Saturday several ways his company was helping others who are fighting the coronavirus. “In healthcare, our technology is being used for telemedicine, enabling user-intuitive solutions to share data and access critical information,” Nadella wrote. “St. Luke’s University Health Network in Pennsylvania is using Teams to video chat with patients most vulnerable to COVID-19.”

Apple CEO Tim Cook tweeted on Saturday that his company was “donating millions of masks for health professionals in the U.S. and Europe.”

Our teams at Apple have been working to help source supplies for healthcare providers fighting COVID-19. We’re donating millions of masks for health professionals in the US and Europe. To every one of the heroes on the front lines, we thank you.

— Tim Cook (@tim_cook) March 21, 2020

On Sunday, Facebook CEO Mark Zuckerberg followed suit, saying his social media company has “donated our emergency reserve of 720,000 masks that we had bought in case the wildfires continued.”

The move by Cisco could be just the start of the company’s coronavirus pandemic response efforts, noted Robbins. “While our world will be different as we move into the future,” he wrote, “it is important that we stay focused on making a positive impact in every way possible.”

More coronavirus coverage from Fortune:

—Financial crisis looms as corporate America presses for coronavirus bailout
—Tax deadline moved to July 15 due to coronavirus
—Death rate in China’s coronavirus epicenter is lower than previously thought
—How working parents are navigating childcare during the coronavirus pandemic
—As oil slides on coronavirus and price war, the market looks for the new normal
—Funerals in the time of coronavirus: How a pandemic is changing the industry
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: World leaders and health experts on how to stop the spread of COVID-19

Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.

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Restoration Hardware Sees Itself As ‘Critical Infrastructure’ During Coronavirus Outbreak

by DE TEAM on March 22, 2020

Workers at Restoration Hardware were given a letter to show police this week if they were stopped on their way to work in California.

The letter, obtained by HuffPost, argues that employees of the upscale furniture company can work despite a statewide shelter-in-place order prompted by the coronavirus outbreak because they are part of “critical infrastructure.”

“Unless the federal government is ordering furniture, I don’t know what they mean,” said one employee who works in the company’s Tracy, California, call center and who spoke on condition of anonymity.

California Gov. Gavin Newsom (D) issued the executive order on Thursday in an attempt to limit the spread of COVID-19, the disease caused by the coronavirus. Certain critical sectors have been exempted for obvious reasons, such as emergency services, communications, and food and agriculture.

Grocery stores, banks, pharmacies and some other retail locations have been allowed to stay open.

Restoration Hardware sells high-end furniture, bedding, bath fixtures and lighting through its stores and website. It’s not clear how the company is part of what the state of California describes as “functions critical to public health and safety, as well as economic and national security.”

The letter referred any questions from police to Carrie Cassidy, the company’s “chief people officer,” and David Kolek, its senior counsel. Kolek did not immediately respond to a call on Saturday afternoon.

Cassidy told HuffPost the company had concluded after a legal review that its customer call center was an essential service. Cassidy said customers may be wondering what happened to their orders and the company needs to be able to let them know.

Asked if it was essential that a customer receive a Restoration Hardware order during a pandemic, Cassidy said that if the company’s orders don’t continue to move out of the ports, it could affect the movement of critical items like food and toilet paper.

“We have to move those goods so the ports don’t back up,” she said.

Any employee who does not believe they are filling an essential role is not required to come into work, Cassidy said.

The letter provided to employees claims that Restoration Hardware’s workers fall within two critical sectors: communications and information technology, and transportation and logistics. While some of the company’s employees no doubt have jobs in IT and logistics, the state’s explanation of those sectors pertains mostly to entities that provide communications or logistics, like telecommunications or shipping companies.

The Restoration Hardware call center employee said their job consists primarily of fielding customer calls about bathroom vanities, bed linens and other home-furnishing products. The worker said dozens of employees were continuing to work close to one another at the call center, in an environment that the worker described as disconcerting during a pandemic.

The call center worker said employees who were uncomfortable coming to work had been using whatever paid sick days or vacation time they had to stay home.

“Most people are scared and nervous. This feels like we really just have dollar signs on our heads,” the employee said, adding: “You try to be polite to people when they have questions about a table lamp. It’s gut-wrenching. I feel like I can’t catch my breath after these calls. I just don’t want to be there.”

The company’s website now features a letter from its chief executive, Gary Friedman, explaining that certain stores had been ordered to close, so the company would be closing all of them nationwide through March 27, “to do our part in the fight against the continued spread of the coronavirus.”

He applauded health care and service workers around the country for soldiering on during a pandemic, as well as his own workforce.

“And thank you to the men and women of team RH who have remained ready and willing to serve our guests during one of the most unsettling and unpredictable times of our lives,” he wrote.

The letter given to employees in California:

A HuffPost Guide to Coronavirus

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Obama’s Bad Stimulus Example – WSJ

by DE TEAM on March 21, 2020

President Trump is negotiating with Congress over a massive stimulus plan to combat the severe economic and financial fallout from the coronavirus. One idea that seems to be catching on is a check of up to $1,200 to be mailed to every American, while Democrats in Congress want paid-leave policies and expanded welfare benefits. These may provide some needed temporary relief for families but are unlikely to help lift the economy. Keynesian stimulus almost always fails, and often makes the downturn worse and the eventual recovery weaker.

Mr….

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Kohl’s taps credit, withdraws earnings outlook because of coronavirus

by DE TEAM on March 20, 2020

A shopper prepares to pay for items at a Kohl’s department store in Peru, Illinois, May 16, 2019.

Daniel Acker | Bloomberg | Getty Images

Kohl’s has withdrawn its earnings outlook for the current quarter and fiscal year, as it grapples with the hit it will take from the coronavirus pandemic.

The department store chain will shut its stores nationwide, effective 7 pm local time March 19 until April 1, at least, to try to help halt the spread of COVID-19.

Kohl’s also announced Thursday that it has fully drawn its $1 billion unsecured credit facility to increase its cash position and “preserve its financial flexibility,” in the midst of so much uncertainty.

The company said it is working to significantly reduce expenses and built-up inventory. It has temporarily suspended share buybacks. Further, it said it is evaluating its dividend model.

Kohl’s “remains committed to paying a dividend over the long-term and to the extent it makes a near-term change in its program due to the COVID-19 impact, it would seek to resume its approach following stabilization in the environment,” the company said in a statement.

Kohl’s shares had rallied earlier Thursday, ending the day up more than 10% at $17.18. But shares fell more than 3% in extended trading, after this news. The retailer, which has a market value of about $2.7 billion, has watched its stock drop over 66% in 2020.

The company joins a growing list of retailers taking similar measures to try to preserve their businesses, as thousands of stores across the U.S., including entire malls, have temporarily gone dark.

Nordstrom, Abercrombie & Fitch and L Brands are among the names that have withdrawn their outlooks, unclear what the future will hold.

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