Headlines of the Week

Retail sales plunge a record 16.4% in April, vs 12.3% drop expected

Consumer spending tumbled a record 16.4% in April as the backbone of the U.S. economy retrenched amid the coronavirus pandemic, according to a government report.  Some 68% of the nation’s $21.5 trillion economy comes from personal consumption expenditures, which tumbled 7.6% in the first quarter just as social distancing measures aimed at containing the coronavirus began to take effect.  Data showed that the slowdown continued into the first part of the second quarter as layoffs began to mount and consumers went into lockdown.

J.C. Penney files for bankruptcy

J.C. Penney filed for Chapter 11 bankruptcy protection on Friday evening, citing disruption caused by the COVID-19 crisis. The department store went into bankruptcy with a reorganization plan that had the support of owners of 70% of its first-lien debt, according to an emailed press release. The company has commitments for $900 million in debtor-in-possession financing, including $450 million in new money. Penney said in the release it would reduce its store footprint but did not immediately disclose details on how many stores it would close.

 

 

Apparel & Footwear

Li & Fung investors approve deal to delist Hong Kong trading house

Shareholders of Li & Fung, the world’s largest sourcing company, on Tuesday gave the green light to a 7.2 billion Hong Kong-dollar ($928.9 million) proposal that will allow its founding family to take the company private during a difficult business environment. The move will see the century-old business icon delist from the Hong Kong Stock Exchange, where it had its trading debut in 1973 and had been one of the most popular blue chip stocks among investors until it lost that status in 2017. Once a formidable middleman connecting retailers in the West with manufacturers in the East, Li & Fung’s business increasingly has been challenged by e-commerce, rising protectionism, and economic uncertainties amid the coronavirus pandemic. The pitch to investors from the family’s fourth generation chief executive, Spencer Fung, was that taking the company private was a necessary step for turning it around amid mounting uncertainties.

Little Black Dress bought in pre-pack administration deal

Womenswear marketplace Little Black Dress has been bought out of administration by private investment firm Fashion Ventures Limited in a pre-pack deal. The sale of the Manchester-based business which sells occasionwear brands including Adrianna Papell, Goddiva and Little Mistress went through last night. Its six-person team has been retained as part of the deal, according to Mark Evans, Little Black Dress chief executive. “We’re extremely pleased that the future of Little black Dress has been secured: that jobs have been saved and that we hope to be able to continue to support our UK and international brands in the future.”

DTC footwear brands are pivoting to slippers

At the beginning of the year, Birdies co-founder and CEO Bianca Gates had a thorough plan for 2020 focused on outdoor shoes and the slogan “Travel boldly.” Needless to say, there is little traveling going on anywhere right now. Birdies, like many fashion brands, has had to shift priorities. For brands in the comfortable footwear world like Birdies and others, a growing shift toward outdoor shoes has turned into a swift return to comfortable indoor clothes as customers’ lives have changed drastically. The changes Birdies and other brands like Soludos and Rothy’s have made is a lesson in the importance of responding to quickly consumer behavior.  Gates said sales of outdoor shoes had been growing 400% year-over-year, since their launch in 2017. To avoid designing a whole new collection of indoor shoes, when multiple outdoor style releases had been planned for March, Birdies focused on bringing back some indoor styles that had been discontinued.

Boohoo proposes share placing to raise £200mln to snap up acquisitions

Boohoo Group PLC is proposing a share placing to raise £200mln to snap up future acquisitions. The online fast-fashion retailer said “numerous opportunities” are “likely to emerge in the global fashion industry over the coming months”. The coronavirus crisis has pushed several brands into administration, such as Cath Kidston, Oasis and Warehouse. As of 29 February, Boohoo had £240mln net cash and has remained cash generative since. Trading has improved during April, delivering year-on-year growth, after an initial drop in sales as lockdowns were implemented in March. The listed firm said May performance remains “robust”.

S.F. Retailer Sues Insurer For Denying COVID-19 Claim

Mudpie, a 44-year-old boutique for children’s clothing, toys and accessories in San Francisco, scaled back its commerce earlier this year when non-essential businesses were required to shutter to prevent the spread of COVID-19. It recently reopened for curbside pickup service and has continued to run its ecommerce shop mudpie-sf.com. The mother-and-daughter team of owners Cheryl and Sarah Perliss thought that the store’s business-interruption insurance would help support them during the crisis. But their claim with Travelers Casualty Insurance Company of America was denied, according to a statement from the boutique’s lawyers. On May 11, Mudpie, Inc. filed a class action lawsuit on behalf of California’s retail stores. The suit alleges that small businesses have been wrongfully denied coverage for losses resulting from following government-mandated guidelines and closing shops to help prevent the spread of COVID-19.

 

Athletic & Sporting Goods

NBA reportedly to switch to Wilson balls, moving on from Spalding

Through the entire 30-year tenure of David Stern as NBA Commissioner and into the Adam Silver era, Spalding has made the official basketball of the NBA.  That is about to change — Wilson will take over as the official basketball of the NBA in a couple of seasons, reports Chris Haynes of Yahoo Sports.  The league’s separation from Spalding was described as “mutual.”  Wilson’s Evolution and NCAA balls are very popular at the high school and college level, however, the NBA and Wilson are teaming up to create a new ball — a genuine leather ball, instead of the composite leather of the Evolution/NCAA — for the league, Haynes reports.

 

UFC investor Endeavor secures $260 million loan to help survive coronavirus hit

Endeavor Group Holdings Inc. has secured a $260 million loan — on top of already implemented cost-cutting measures — to help it survive the coronavirus pandemic.  The term loan will supplement an existing $2.8 billion term loan and carry an interest rate of just under 11%, according to The Wall Street Journal, citing people familiar with the matter.  Los Angeles-based Endeavor, which owns talent agency WME and has live-events businesses, has been hit hard by the shutdowns of film and TV productions and cancellations of concerts and sports events to contain the spread of Covid-19.  The company’s revenue has fallen by about 70 percent, excluding its majority stake in Ultimate Fighting Championship, The Wall Street Journal said. The UFC resumed televised fights on Saturday with no fans and continues to bring in revenue through a deal with Disney-owned ESPN.

Cosmetics & Pharmacy

Coty Announces Strategic Partnership with KKR for Professional Portfolio

Coty announced a strategic partnership with global investment firm KKR to sell a majority stake in its professional beauty and retail hair businesses in a deal valued at $4.3 billion or 12.3x 2019 EBITDA. Coty is one of the world’s largest beauty companies with an iconic portfolio of brands across fragrance, color cosmetics, hair color and styling, and skin and body care. KKR is a leading global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, and real estate, and credit, with strategic partners that manage hedge funds. Peter Harf, Founding Partner of JAB and Chairman of Coty, commented in a statement: “We are thrilled to enter into this strategic partnership with KKR, one of the world’s preeminent investment firms with an exemplary track record of value creation. Their investment and partnership will be instrumental in strengthening Coty’s balance sheet and helping the company to achieve long-term growth in shareholder value.”

Creative Hairdressers Has Entered into an Asset Purchase Agreement with HC Salon Holdings

Creative Hairdressers, Inc., the parent company of Hair Cuttery, Bubbles, and Salon Cielo, announced an agreement to sell its assets to HC Salon Holdings, Inc., an affiliate of Tacit Salon Holdings, LLC, along with a plan designed to significantly reduce its debt obligations and establish a sound financial platform for long-term growth. Vienna, Virginia-based Creative Hairdressers is one of the largest independent, family-owned chains of hair salons with more than 750 salons nationwide. Founded in 1974 by Dennis and Ann Ratner, the salon chain operates in 15 states and the District of Columbia.

Tacit Salon Holdings (TSH), a socially responsible investment platform committed to sustainability, gender equality, and diversity inclusion, is a holding company formed to acquire salon platforms. TSH provides capital and infrastructure and teams up with industry leaders to acquire, reposition, and grow haircare assets in a socially responsible way.

Shiseido’s 2020 First Quarter Earnings Look to China for Future Results

Japanese beauty leader Shiseido Company, Limited announced its 2020 first quarter earnings. These come at a time of unprecedented challenge for brands who are coping with massive economic downturn as a result of COVID-19. Yet the Beauty sector at this time has held relatively strong. Even so, Shiseido reported that COVID-19 had a significant impact on net sales and operating profit, which were down 16% and 83% respectively. In terms of net sales, all areas experienced a marked drop with China coming in at -12%. It “bottomed out in February” but is projected to be back on the “road to recovery” by March. This is an impressive turnaround, considering that the China market experienced negative growth in offline sales and saw 70% store closures. Online, however, it was a different — and far better — story, with strong demand for beauty products and continued growth in its e-commerce business.

 

Discounters & Department Stores

Dillard’s swings to $162M loss as Q1 sales plummet 47%

Dillard’s on Thursday reported net retail sales (not including its construction business) fell 47% in the first quarter to $751 million. The company swung to a loss of $162 million, from net income of $78.6 million a year ago, as gross margin contracted from 37.8% last year to 12.8%. The retailer has reopened 149 locations (including 24 clearance centers), and plans to reopen 116 Dillard’s stores and five clearance centers next week. That will be the majority of its fleet of 255 full-line stores and 30 clearance centers in 29 states. Sales at the 45 stores reopened May 5 with reduced hours are at about 56% of last year’s, the company said. Some 65% of Dillard’s 38,000 associates remain on furlough, down from 90% “at the peak of store closures,” according to a company press release.

Neiman Marcus says it has a plan

In bankruptcy documents filed last week, Neiman Marcus Group came prepared with plans — already agreed to by shareholders and major creditors — for an autumn​ exit, free of some $4 billion in debt and ready to embark on a comeback. For all that work, however, the question remains whether the luxury department store retailer can return to its former glory, which sprang from a high regard for fashion and personal service. “Neiman always served the high end in the Texas market, and traded in New York for years only as Bergdorf Goodman, in the theory that New Yorkers are very provincial — like never changing the name of Yankee Stadium, or how Duane Reade is ‘Walgreens’ everywhere else,” Alan Behr, fashion industry attorney and partner at Phillips Nizer, told Retail Dive, noting that the company opened a “Neiman Marcus” banner at Hudson Yards only last year.

Target to acquire Deliv tech, as the last-mile startup shuts down

Deliv is going out of business, and Target has reached a deal to acquire the same-day delivery startup’s technology and some of its staff, a source familiar with the matter confirmed to Retail Dive’s sister publication Supply Chain Dive. The two companies have a binding agreement that is expected to close in the coming weeks, the person said. The acquisition was first reported by NBC. Target will acquire Deliv’s proprietary technology that assists in the batching and routing of orders, the person familiar with the deal told Supply Chain Dive. Target will not acquire any of the existing relationships that Deliv had with customers, which will end, the person said.​ Deliv’s founder and Chief Executive Daphne Carmeli emailed employees last week letting them know the company was stopping operations and its last day would be “on or before” Aug. 4, according to The Wall Street Journal.

 

 

Emerging Consumer Companies

Nanit, New York-based maker of baby monitors and sleep trackers, raised $21 million

The developer of a machine learning-enhanced baby monitor, Nanit, announced that it has raised $21 million in funding. The round came from existing investors, including Jerusalem Venture Partners, Upfront Ventures, RRE Ventures and Rho Capital Partners. It brings the company’s total capital raised to $50 million. Prices for the sleep monitoring and video device range from $299 for a wall-mounted camera to $379 for one attached to a floor stand. The company’s app is free for the first year and then costs $5 per month. Upgrades to the app and additional physical products are also available.

Luxury handbag marketplace Rebag raises $15 million Series D

New York-based Rebag, the luxury handbag marketplace founded in 2014, secured $15 million in a Series D funding round. Private equity firm Novator led the investment, and existing investor General Catalyst participated. It brings total funding $68 million. Rebag will use the funding for technology advancements like Clair by Rebag, the software tool that allows the company to appraise a handbag and generate an offer in an instant. Rebag will also continue to build on its Infinity Program, which allows consumers to purchase a handbag and trade it in for credit towards a new style in varying tiers.

Yardbird, a Minneapolis-based outdoor furniture brand, raised $4.4 million in funding

Yardbird, the Minneapolis-based outdoor furniture brand that makes its wares in part from recycled plastic harvested from beaches and ocean-bound waterways, has raised $4.4 million in funding. The company uses plastic that it says is repurposed ocean plastic sourced from beaches, waterways and ocean-bound susceptible locations – reportedly over 75,000 pounds of this material into its furniture in 2020 alone — meaning roughly half of every piece of resin-based wicker furniture that the company makes contains that recycled material.

 

 

Grocery & Restaurants

Report: Uber wants to buy Grubhub

Grubhub stock rose more than 20% in early trading Tuesday after Bloomberg News reported that the Uber was looking to buy the controversial Chicago-based third-party delivery operator. Grubhub released the following statement: “We remain squarely focused on delivering shareholder value. As we have consistently said, consolidation could make sense in our industry, and, like any responsible company, we are always looking at value-enhancing opportunities. That said, we remain confident in our current strategy and our recent initiatives to support restaurants in this challenging environment.” “The companies are in talks about a deal and could reach an agreement as soon as this month,” according to the Bloomberg , which is citing anonymous sources. “Chicago-based Grubhub is valued at about $4.5 billion, while Uber has a market capitalization of about $55 billion.”

Krystal to be bought out of bankruptcy by Fortress Investment Group for $27 million

The Krystal Company, which filed for Chapter 11 bankruptcy protection in January, has found a buyer, according to court documents filed Wednesday. DB KRST Investors LLC, an affiliate of one of Krystal’s major creditors, Fortress Investment Group LLC, is buying the quick-service burger chain based in Dunwoody, Ga., for $27 million and will assume $21.5 million in debt. Judge Paul Bonapfel of the U.S. Bankruptcy Court in Atlanta said he would approve the deal that was struck last week to sell Krystal’s corporate units, which comprise about 70% of the system. As of last year, the chain had 205 corporate location and 105 franchises. Krystal, which has a cult following, particularly in the Southeast, is being sold by its current owner, Argonne Capital Group LLC, based in Atlanta.

Kroger tops 100,000 hirings since COVID-19 emergency declared

The Kroger Co. said it has hired more than 100,000 workers over the past eight weeks, the period since President Trump declared coronavirus a national emergency. Kroger said Thursday the new employees — including displaced workers from hard-hit business sectors such as restaurants, hotels and food service distributors — have expanded its overall work force to more than 560,000 associates. The Cincinnati-based grocer noted that, during the COVID-19 outbreak, the extra hands have enabled the company to maintain safe access to fresh, affordable food and other staple items for customers of its 2,757 supermarkets. Since March, Kroger has invested $700 million in bonus pay for associates and protections for workers, customers and communities. On March 31, Kroger announced a “hero bonus” of $2 an hour for all frontline grocery, supply chain, manufacturing, pharmacy and call center associates for time worked from March 29 to April 18. That was later extended to May 2 and then to May 17. The company also paid out a one-time bonus of $300 to full-time associates and $150 to part-time associates on April 3.

Home & Road

Bed Bath & Beyond’s digital pivot continues; most stores won’t reopen before June

Bed Bath & Beyond continues to expand its fulfilment capabilities and omnichannel offerings to support increased demand across its digital channels and is also making plans to gradually reopen its stores. The company, which expects the majority of stores across its banners to remain closed until at least May 30, 2020, is expanding buy-online-pickup-in-store and contactless curbside pickup services to at least 200 additional stores, for a total of 750 stores, or approximately 50% of its store fleet across the U.S. and Canada. Bed Bath & Beyond said its expanded fulfilment capabilities will enable it to ship online orders in two days or less on average, or make orders available for pick-up in less than two hours for customers using BOPIS and contactless curbside services. (As previously reported, the retailer has converted 25% of its stores into regional fulfillment centers.) The company, whose BuyBuyBABY and Harmon stores have remained open during the pandemic, intends to gradually re-open its other retail banners, starting with approximately 20 stores, including Bed Bath & Beyond and Christmas Tree Shops stores, by May 22, subject to state and local regulations.

Art Van stores rebranding, reopening as Loves Furniture

The new owner of 27 Art Van, Levin and Wolf Furniture locations confirmed Tuesday it will reopen the stores as Loves Furniture in the initial rollout of a new furniture store brand. Loves Furniture CEO and former Art Van executive Matthew Damiani told Furniture Today these stores, expected to soft open in early June, are just the beginning. Loves is projecting “between $200 million and $300 million in annualized year-one sales from the 27 stores, with plans to ramp further through the acquisition of several more locations,” he said. Last week, the U.S. Bankruptcy Court in Wilmington, Del., approved the sale of inventory, leases and certain other assets of 27 stores in the former Art Van Furniture portfolio to an affiliate of private equity firm U.S. Assets for $6.9 million. The stores are located in Michigan, Pennsylvania, Ohio, Illinois, Virginia and Maryland.

The Container Store Q4 sales expected to drop 5%

Net sales at The Container Store were expected to be down nearly five percent in the fourth quarter as the coronavirus disrupted business, the specialty store said. The company’s consolidated net sales in the period ended March 28, 2020, are estimated to be $241.3 million, down 4.7% compared to the prior-year quarter, due primarily to the impact of COVID-19. Net sales in The Container Store retail business are estimated to be $224.1 million, down approximately 4.9%. Elfa International third-party net sales are estimated to be $17.3 million, down approximately 1.1% compared to the fourth quarter of fiscal 2018. Excluding the impact of foreign currency translation, Elfa third-party sales are expected to be up 4.6%. Comparable store sales are estimated to decrease 3.6% with Custom Closets sales expected to increase 1.5%.

Ethan Allen sales off nearly 16% in fiscal Q3

Vertically integrated retailer and manufacturer Ethan Allen reported net sales of $149.8 million for its fiscal 2020 third quarter ended March 31, a decrease of 15.8% with the comparable prior-year period. Along with COVID-19’s third-quarter impact on retail and manufacturing operations, the company attributed the decrease to lower order backlogs entering the period from the transition to a membership model; and a 33.6% decrease in international sales primarily due to lower sales to China and in Canada. Ethan Allen had a third-quarter net loss of $223,000 compared with net income of almost $8 million for the same period in fiscal 2019.

Purple’s net revenues up 46.3% in Q1, net income improves to $20 million

Purple Innovation said its net revenues increased 46.3% to $122.4 million in the first quarter ended March 31. Direct-to-consumer revenues increased 50%, while wholesale revenues increased 39%, the company said. Net income improved to $20 million. “Our first quarter performance improved significantly year-over-year despite the challenges created by the COVID-19 pandemic,” said Joe Megibow, Purple’s CEO. Megibow said Purple reacted quickly to the changing environment by scaling back mattress production, furloughing employees, postponing investments in capacity and retail showroom expansion, deferring executive and board compensation to preserve liquidity, and pivoting the majority of its time and resources to its digital channel to capitalize on the accelerated shift towards online purchasing. Following a temporary slowdown in direct-to-consumer sales in late March after initial shelter-at-home directives were announced, demand “accelerated sharply” in the first weeks of April, the company said. Because Purple is vertically integrated with entirely domestic production facilities, the company said it was able to adapt quickly to both increased demand and shifts in product-mix.

Jewelry & Luxury

Diavik Partners Clash in Dominion Insolvency Hearings

Dominion Diamond Mines’ recent filing for protection from insolvency has sparked tension between that company and Rio Tinto, its longtime partner in the Diavik diamond mine. Diavik, based in Canada’s Northwest Territories, is currently run by Diavik Diamond Mines Inc. (DDMI), a subsidiary of Rio Tinto, its 60% owner. Dominion owns the remaining 40%. In filings before the Court of Queen’s Bench in Alberta, Canada, the two partners sparred over whether Dominion should keep receiving diamonds from Diavik and whether the mine should continue to operate in this time of COVID-19.

Simon G. Jewelry Debuts Direct-to-Consumer Sales That Benefit Its Retailers

Simon G. Jewelry has been a jewelry store staple for 35 years. The family-owned brand, led by chief executive officer Zaven Ghanimian, is currently in more than 800 retail doors, including well-known independent chains Robbins Brothers, Diamonds Direct, and Smyth Jewelers. And in its long history, the company’s never sold directly to consumers. But the nationwide store closures brought on by the COVID-19 pandemic have prompted the company to rethink its wholesale-only model—in ways that benefit its hundreds of retail partners. Simon G. debuted an e-commerce platform on its website Wednesday to sell its fine jewelry directly to consumers online. But there’s a twist: A portion of the profits from every transaction will benefit the retailer located closest to the customer.

The coronavirus pandemic has given Amazon the perfect opportunity to swoop in on the $300 billion global luxury market

Amazon has had its sites set on the $300 billion global luxury market for some time but working out how to become a world-class luxury retailer and convincing designer brands to come onto its platform has proven to be highly problematic for “The Everything Store.” On Thursday, it made a major breakthrough in its quest to move into luxury fashion, partnering with Vogue and the Council of Fashion Designers of America to launch a digital storefront that allows its customers to buy luxury goods from independent designers such as Philip Lim and Batsheva on the site.

 

Office & Leisure

Cirque du Soleil founder Guy Laliberté charting return

Guy Laliberté is Cirque du Soleil’s founder. Now he’s pledging to be its savior. The former street performer turned billionaire expressed as much in a letter published Wednesday morning in the Montreal Gazette. In a highly personal assessment of Cirque’s ongoing financial concerns, Laliberté outlined the company’s many options as if they were combatants in a wrestling ring. He closed his manifesto with, “A few days before the registration deadline for the battle royal, I am deciding whether or not I’m going to jump into that wrestling ring …” Laliberté says the “battle royal” involves several potential investors, led by Canadian telecommunications giant Québecor. He does not specify what is the “registration deadline,” but it seems to be fast approaching. Cirque is juggling its finances after ceasing all operations and laying off 4,700 cast and crew worldwide because of COVID-19. Laliberté founded Cirque in 1984. But the man who dreamed it all is no longer even a shareholder.

Samsonite sales plunge 80 per cent as travel all but halts

With global travel now all but shut down, luggage-retailing goliath Samsonite is facing unprecedented challenges, with net global sales plunging by 80 per cent last month. But its CEO Kyle Gendreau remains resolutely positive about its future fortunes when the impact of Covid-19 lessens. The group recorded year-on-year net sales decreases of 8.2 per cent, 14.9 per cent and 55 per cent respectively in January, February and March as all around the world airlines grounded fleets and countries closed their borders to contain the spread of the coronavirus. Then came April’s 80-per-cent fall. The company has secured a US$600 million term loan this month, which it expects when added to its existing cash reserves of $1.2 billion, will help it ride out the “near-complete halt in travel and tourism worldwide,” said Gendreau. “This substantial liquidity position, along with the aggressive cost-reduction initiatives as well as other actions to preserve cash that we have implemented and will continue to pursue, will provide us with sufficient capacity to navigate the current headwinds from the Covid-19 pandemic as well as a prolonged downturn,” said Gendreau.

Why A Private Equity Firm Backed By Bernard Arnault Is Putting $400 Million Into Norwegian Cruise Line

Has COVID-19 delivered a death blow to the cruise industry? The luxury brand buyout specialists at L Catterton think not. As shares of Norwegian Cruise Line continued to sink like the Titanic—down 80% from the end of 2019 to $12 per share by late April—Scott Dahnke and his team at L Catterton were quietly eyeing the wreckage. The partners at his Greenwich, Connecticut, private equity firm had already made a killing by taking a cruise ship-based beauty chain public and they were focused on high-end brands. After all, the “L” in their name comes from their financial backing by LVMH, the French luxury goods giant and they had already scored a string of successes from investments in the upscale home decorator Restoration Hardware, Lily’s Kitchen, a London-based organic dog food maker and Peloton, the Internet-connected stationary bicycle concern. But this was new territory. Never before had they seen such a rapid reversal of fortune of a well-regarded brand. Dahnke decided the time was right to pounce, despite the fact that in a best-case scenario, Norwegian wouldn’t be expected to sail any of its fleet’s cruise ships for at least two months. “There’s no question that consumers love to cruise . . . they want to get back on the water,” says the 54-year-old Dahnke.

Technology & Internet

Amazon says deliveries returning to normal after COVID-19 crush

Amazon.com Inc. says the one- and two-day delivery times that shoppers have come to expect should gradually return in coming weeks as the online retailer catches up from a demand surge tied to the coronavirus outbreak. The company on Sunday lifted restrictions on the amount of inventory its suppliers can send to Amazon warehouses and is shortening delivery times—which had stretched for weeks for some products since the outbreak began—back to days. Amazon spends months preparing for the surge in consumer demand that usually comes during the holiday season. The COVID-19 outbreak that closed many retail bricks-and-mortar stores and sent millions of shoppers online created a month’s worth of Black Friday spending without warning. Once Amazon fell behind, it took several weeks and hiring 175,000 people to get back on track.

 

How Amazon tried to get shoppers to buy less so it wouldn’t get overwhelmed in early days of coronavirus crisis

Amazon has seen a huge surge in sales as people shopped from the safety of their homes during the coronavirus pandemic, but orders faced heavy delays as the e-commerce giant struggled to keep up. In order to catch up, Amazon tweaked its online shopping experience to accomplish something extremely unusual: get shoppers to order less. For weeks, Amazon stopped coupons, product recommendations and promotional deals. It slowed down advertising, reviews, and its affiliate marketing and Fulfilled by Amazon programs, while placing strict limits on incoming inventory. Now, Amazon has started to turn these features back on, and delivery speeds are returning to normal.

 

Elon Musk already restarted Tesla production. Now the county says it’s allowed next week

Alameda County, where Tesla’s main manufacturing plant is located, cleared the electric-car company to start up again next week with safety precautions in place. But led by chief executive Elon Musk, Tesla already ramped up production earlier this week, one of the most high-profile violations of a local health order amid the coronavirus crisis and raising questions about county enforcement. Alameda County said late Tuesday that it had approved Tesla’s site-specific plan to reopen its plant in Fremont, Calif., assuming the company follows strict safety guidelines, including social distancing to prevent the spread of covid-19. The county said that the Fremont Police Department will make sure Tesla is following the agreed-upon safety guidelines. The plan is also contingent on public health indicators tracking the spread of the coronavirus in the Bay Area.

 

Finance & Economy

U.S. consumer prices post largest decrease since 2008

U.S. consumer prices dropped by the most since the Great Recession in April, weighed down by a plunge in demand for gasoline and services including airline travel as Americans stayed home during the coronavirus crisis.  The report from the Labor Department also showed a record decline in underlying prices last month, raising the specter of a bout of deflation as the economy sinks deeper into a recession triggered by lockdowns to slow the spread of COVID-19, the respiratory illness caused by the coronavirus.  The economy contracted in the first quarter at its steepest pace since the 2007-09 downturn. Deflation, a decline in the general price level, is harmful during a recession as consumers and businesses may delay purchases in anticipation of lower prices.

Consumers are having a tougher time getting credit — and keeping it

Looking to secure a little more financial flexibility by extending your credit line? You may find that credit is getting harder to come by.  In some cases, existing credit is being cut. Credit card holders have had their credit limit slashed or their card closed involuntarily. Others can’t get the credit to begin with. Homeowners interested in a home equity line of credit, or HELOC, are finding some banks no longer take applications. These moves by banks are an effort to rein in available credit as the economic impact from the coronavirus outbreak has made consumers’ ability to reliably make payments increasingly unpredictable.