The Big Story

The Longest Five Months

Doug Stebbins, CFA

Think back to this past New Year’s Eve and all the hopes we had for the upcoming year.  Even the most jaded of us wouldn’t have predicted what the next few months had in store for us.  Is it possible that 2020 is only five months old?  We are unquestionably living through a historic time.  There are few Americans alive today that lived through the Flu Pandemic of 1918, the Great Depression, the civil unrest of the 1960s and the Nixon Impeachment.  However, as a nation and as a planet, it is as if we have been forced to deal with all of the above in the course of the past five months.

You can be excused if the past few months seem like a bit of a blur.  Just a brief timeline of how the impeachment of President Trump, the spread of COVID-19, and the death of George Floyd all overlapped.

  • January 4 – The World Health Organization reports on a cluster of pneumonia cases – with no deaths – in Wuhan, China.
  • January 15 – Articles of impeachment are delivered from the House to the Senate.
  • January 20 – First reported U.S. case of COVID-19.
  • February 5 – The Senate votes to acquit President Trump of the charges of abuse of power and obstruction of Congress.
  • February 6 – First U.S. death from COVID-19.
  • March 17 – The San Francisco Bay Area is the first of many communities to go into lockdown, shuttering businesses and crippling the economy.
  • March 23 – S&P 500 hits a YTD low, down 34% from its peak one month earlier.
  • April 1 – U.S. confirmed COVID-19 cases reach 200,000. Worldwide cases reach one million.
  • April 30 – The number of Americans who have filed for unemployment since mid-March reaches 30 million.
  • May 25 – George Floyd dies at the hands of Minneapolis police. Over a week of protest and riots ensue across the country.
  • May 28 – COVID-19 deaths in the U.S. top 100,000.

That is a lifetime worth of stunning headlines all within in a five-month period.  It is so much, so fast, that it is difficult to grasp all that we have been through (and continue to endure) as a nation.  For generations to come, we will be asked “Where were you when _____ happened in 2020?” Most of us will have the same response: “I was at home that day.”

It is hard to imagine what the long-term effects of these five months of trauma will have on the American people and economy.  Consumer spending accounts for 70% of the US GDP, so the economy will recover when U.S. consumers reengage.  The markets seem to think that there are reasons to be optimistic that consumers will return to drive the economy.  Since the market trough on March 23, the S&P 500 has rallied 43% and is now only down 2% from where it was at the beginning of the year.

It has been an unprecedented five months and there is no doubt that this wild ride will continue for months, if not longer.  But hopefully we can emerge from this chaos a little (or perhaps a lot) smarter, stronger and more aware than we were on January 1.  As Warren Buffet likes to say, “Never Bet Against America” or, perhaps more appropriately, given all that we have been through together, “Never Bet Against Americans”.

Headlines of the Week

May sees biggest jobs increase ever of 2.5 million as economy starts to recover from coronavirus

Employment stunningly rose by 2.5 million in May and the jobless rate declined to 13.3% according to data from the Labor Department that was far better than economists had been expecting and indicated that an economic turnaround could be close at hand.  Economists surveyed by Dow Jones had been expecting payrolls to drop by 8.3 million and the unemployment rate to rise to 19.5% from April’s 14.7%. If Wall Street expectations had been accurate, it would have been the worst figure since the Great Depression. As it turned out, May’s numbers showed the U.S. may well be on the road to recovery after its fastest plunge in history.

The biggest US mall owner, Simon Property, sues Gap over skipped rent payments

The biggest mall owner in the country, Simon Property Group, is suing one of its biggest tenants, Gap, saying it failed to pay more than $65.9 million in rent and other charges due during the coronavirus pandemic. Many landlords are also beginning to send default notices to retailers that have skipped payments. Apparel retailer Gap said in late April that it stopped paying rent on its temporarily shuttered stores, amounting to about $115 million in monthly expenses in North America. Simon malls have 412 Gap stores, including Banana Republic and Old Navy. This makes Gap Simon’s biggest in-line tenant at its malls in terms of rent. Gap also warned in late April that litigation could arise as a result of its skipped payments. “Although we believe that strong legal grounds exist to support our claim that we are not obligated to pay rent for the stores that have been closed … there can be no assurance that such arguments will succeed,” the company said in a filing with the Securities and Exchange Commission at the time.



Apparel & Footwear

New York & Co. owner RTW Retailwinds warns bankruptcy filing imminent

New York & Co. parent RTW Retailwinds on Wednesday morning warned about its ability to continue as a going concern, and that it might be preparing to file for Chapter 11 bankruptcy protection, hit hard by the Covid-19 crisis. It said in an 8-K filing with the Securities and Exchange Commission that it is in the process of finalizing a 10-K filing with its auditor that will reflect, among other things, “a substantial doubt” about its ability to continue as a going concern. It said it needs more time to consider the disclosures about those matters, and it has requested an extension to file its annual report. Should RTW Retailwinds file for bankruptcy, it would join a growing list of retailers that have been pushed to the brink during the coronavirus pandemic, as so-called nonessential retailers’ stores were temporarily forced shut.


Lands’ End reports loss of $20.6 million for quarter as pandemic takes toll

Lands’ End’s turnaround predictably was set back by the COVID-19 crisis, with the company reporting a preliminary loss of $20.6 million for its quarter ended May 1. Revenue fell to $217 million in the recent quarter, down from $262.4 million for the comparable period last year. Lands’ End loss of $20.6 million, or 64 cents a share, for the quarter compared with a loss of $6.8 million, or 21 cents a share, for the quarter ended May 3, 2019. In response to the pandemic, Lands’ End reduced operating expenses and other costs by furloughing employees, temporarily reducing salaries for its executives and corporate staff and eliminating the jobs of approximately 10% of its corporate staff, the company said. It also reduced its inventory for the fall and holiday season and cut its planned capital expenditures to about $20 million from about $40 million for the 2020 fiscal year. The company sees opportunities to expand its customer base through initiatives, such as its planned launch of Lands’ End on and in 150 Kohl’s retail stores this fall.

Fashion giant Ted Baker raises £95 million of lifeline funds amid massive losses

The disgraced founder of troubled fashion brand Ted Baker today threw his weight behind a cut-price rescue fundraiser after its profits collapsed last year. Ray Kelvin backed a plan to raise £95 million — more than the value of the entire company — as the ousted tycoon attempted to avoid seeing his majority shareholding being wiped out. Kelvin exited last year after facing claims he forced hugs upon staff, which he denies.

Chief executive Lindsay Page and chairman David Bernstein both later stepped down as well. Kelvin, a 35% shareholder, backed the raiser alongside the retailer’s second largest investor, Toscafund.

Hunter Boots secures 16.5 million pounds in funding

Wellington boot brand Hunter has received 16.5 million pounds in funding following a period of poor trading due to the Covid-19 pandemic. The deal will see minority investor Pall Mall Legacy – which is backed by US investment bank Goldman Sachs – become its controlling shareholder, Sky News reports. Searchlight Capital, which has controlled Hunter since 2012, will retain a large minority stake and board representation following the deal, while Speedo-owner Pentland Group is expected to remain a minority shareholder. Founded in 1856, Hunter is favoured by festival-goers and celebrities like Kate Moss, and has two royal warrants. The heritage brand reported record sales in 2018 but has since been heavily impacted by Covid-19 and the cancellation of events such as Glastonbury.

L Brands’ Victoria’s Secret U.K. Arm Appoints Administrators

Lingerie chain Victoria’s Secret U.K. arm is appointing an administrator to help overhaul its business, amid plunging sales across the retail sector. The unit of Ohio-based L Brands Inc., which operates 25 stores in the country, will appoint Deloitte to renegotiate leases or sell the stores, Stuart Burgdoerfer, the unit’s interim chief executive officer, said in an emailed statement on Friday. Victoria’s Secret U.K., which reported 127 million pounds ($160 million) of revenues in the last financial year, about 1% of the total for L Brands, is represented by law firm Linklaters, according to a court filing.


Athletic & Sporting Goods

Adidas Sales Rebound In China With Return To Growth

After lockdown restrictions were removed, Adidas’ China sales have bounced back faster than anticipated, fostering hopes that the brand can start to recover from a massive drop in worldwide demand, the Financial Times reported.  The company noted in a statement cited by the outlet, “Overall revenue growth in Greater China turned positive for the month of May.” It had previously cautioned in April that it would take many months for sales in the country to return to the level of 2019.  China has turned into one of the biggest individual markets for the Nike competitor following five years of double-digit expansion, bringing in over 20 percent of total sales last year.

Dick’s Online Growth Accelerates In Q1, In-Store Regaining Momentum

Dick’s Sporting Goods joined most other retailers in reporting a steep loss in the first quarter due to the coronavirus pandemic. Online growth, however, accelerated with a boost from curbside pickup, and in-store sales are showing a nice recovery as stores reopen.  The star in the quarter, ending May 4, was e-commerce, where sales jumped 110 percent, supported in part by the introduction of Curbside Contactless Pickup. With Dick’s moving to temporarily close all its locations on March 18 to slow the spread of the virus, e-commerce sales increased 210 percent.


NEXGEL, Inc. Announces the Acquisition of the Sport Defense LLC Product Line

NEXGEL, Inc. announces the acquisition of Sport Defense LLC’s line of products. This strategic acquisition allows NEXGEL to vertically integrate and build out its portfolio of branded consumer products.  Sport Defense is a marketing and distribution company that leverages the unique benefits of ultra-gentle, high-water content hydrogels, manufactured by NEXGEL, to build brands that treat various ailments of the skin caused by athletic training, such as blisters, turf burns, scrapes and skin irritations.

Cosmetics & Pharmacy

Charlotte Tilbury Sells Majority Stake to Puig

After weeks of speculation, Barcelona-based fashion and beauty group Puig has acquired an undisclosed majority stake in Charlotte Tilbury. BDT Capital Partners, financial advisor to Puig, has made a minority investment in the cosmetics brand alongside the Spanish group. Founder Tilbury will continue on as chairman, president and chief creative officer of the brand and retain “a significant minority stake,” according to a statement. Chief Executive Demetra Pinsent will remain in her position. In April, reports surfaced the brand was for sale with a price tag of over $1 billion. The financial terms of the deal were not disclosed. High-profile British makeup artist Tilbury founded her namesake line in 2013, later branching into fragrance and skincare. An active presence on social media, Tilbury is well-known for her work with top fashion brands and magazines and friendships with A-list celebrities like Kate Moss, Kim Kardashian and Jennifer Aniston. Today, the brand is sold in over 150 countries worldwide.

Ieva in Exclusive Negotiations to Acquire L’Atelier du Sourcil

Ieva, a brand linking beauty, well-being, tech, and the environment, has entered into negotiations to acquire beauty eye care specialist L’Atelier du Sourcil. A professional makeup artist for over 25 years, Joss Devilleneuve is a key expert in the beauty of the eyes. She launched L’Atelier du Sourcil a decade ago, establishing the brand as the first international concept offering a range of services and products dedicated to the beauty of the eyes. Ieva is connected jewelry founded by Jean Michel Karam that measures environmental stressors and physical activity. It’s linked to a mobile application, which gives preventative and personalized recommendations based on the environmental information and answers to brief questions asked pertaining to a person’s level of expertise in beauty, and hair and skin preoccupations.


Discounters & Department Stores

Bankrupt J.C. Penney plans 154 initial store closures

J.C. Penney has identified 154 stores it plans to permanently close initially in bankruptcy, with more closures expected to come as the department store chain winds through the court process. Going-out-of-business sales will start upon court approval of Penney’s plan, the company said in a press release. A hearing on the matter is scheduled for June 11. On Thursday, Penney received court approval for a bankruptcy financing package that gives it immediate access to $225 million, with access to an equal amount in July, subject to conditions. Approval came over objections from some creditors who took issue with the terms and securitization of the financing package.

Bankrupt Neiman Marcus breached its loan terms, lender says

Deutsche Bank raised “concerns” last week that Neiman Marcus breached the terms of its asset-based credit line as it seeks a financing package to help it reorganize in bankruptcy. According to the bank, which is an administrative agent on the retailer’s ABL, an initial budget tied to Neiman’s bankruptcy loan (known as “debtor-in-possession” financing) “contained material errors undermining key assumptions” that could impede the retailer’s ability to repay its loan. At issue is the value of Neiman’s inventory, which Deutsche said in a court filing was $159 million less than the initial budget within a week of the retailer’s Chapter 11 filing. Neiman responded in a filing Monday that the company’s business had outperformed the initial budget and it had more cash than expected. “To be clear, no breach has occurred,” attorneys for Neiman said in the filing.

Walmart extends senior hour while Kohl’s, T.J. Maxx reopen with shopping time for those most at-risk of COVID-19

As more stores reopen after temporarily closing due to the coronavirus pandemic, some are setting aside time for their most vulnerable customers to shop. Similar to what grocery stores and essential retailers started in March to help older adults and people with underlying health conditions, retailers including Kohl’s, J.C. Penney, T.J. Maxx, HomeGoods and Ross are opening earlier for senior shoppers and other at-risk groups. In addition to adding the dedicated time for seniors to shop, stores are opening with reduced hours compared to pre-COVID-19. Kohl’s is operating on reduced hours from 11 a.m. to 7 p.m. and has added curbside pickup to stores. It also has one hour a week on Wednesday mornings for seniors, those who are pregnant or with underlying health conditions to shop.



Emerging Consumer Companies

Stitch Fix lays off 1,400 people

Stitch Fix, a San Francisco-based personal styling service, announced that it will lay off 1,400 stylists. Personal stylists make up a large portion of the total staff—5,100 out of 8,000 employees—and a big part of the costs. While Stitch Fix is laying employees off in San Francisco, the company plans to hire 2,000 stylists in lower-cost locations, like Dallas, Pittsburgh, Cleveland, Minneapolis and Austin.

Allbirds to collaborate with Adidas

Allbirds, the six-year-old, San Francisco-based sustainable footwear and apparel brand, is collaborating with Adidas, the 70-year-old, German sporting goods company. The plan is to design a performance sports shoe with what the brands believe will be the world’s lowest carbon footprint – just 2 kg compared to the average 12.5 kg of other sneakers on the market. Allbirds and Adidas hope to release the shoe in the next year.



Grocery & Restaurants

Utz Quality Foods to go public

Snack maker Utz Quality Foods, LLC has entered into a definitive agreement with Collier Creek Holdings, a special purpose acquisition company, to form Utz Brands, Inc., a leading pure-play snack food platform. After nearly a century as a family-owned, privately-held company, the transaction will introduce Utz as a publicly listed company, with an expected initial enterprise value of approximately $1.56 billion, or 11.6x its estimated 2021 pro forma adjusted EBITDA of $134 million. Founded in 1921, Utz produces a full line of products, including potato chips, pretzels, cheese snacks, corn chips, tortillas, veggie stix/straws, popcorn, onion rings, pork skins and more. Its brands include Utz, Golden Flake, Zapp’s, “Dirty” Potato Chips, Good Health, Snikiddy, Boulder Canyon, TGI Fridays Snacks and Bachman.

Luby’s puts assets, operating divisions up for sale

Luby’s Inc., parent to the Luby’s Cafeteria and Fuddruckers brands, is seeking to sell its real estate assets and wind down its operating divisions and will distribute net proceeds to shareholders if it can’t be sold in its entirety, the company said Wednesday. The publicly traded Houston-based company has been seeking strategic alternatives since last September. As of Jan. 21, Luby’s operated 118 restaurants nationally. The company also franchised 95 Fuddruckers locations across the United States (including Puerto Rico), Canada, Mexico, and Panama. It’s Culinary Contract Services division provided foodservice management to 33 healthcare, corporate dining and sports stadium sites.

Earl Enterprises affiliate to buy at least 45 Bravo Cucina Italian and Brio Tuscan Grille restaurants

An affiliate of Earl Enterprises, parent of Buca di Beppo and Earl of Sandwich, is seeking to buy at least 45 Bravo Cucina Italian and Brio Tuscan Grille restaurants. Bravo/Brio parent company FoodFirst Global Restaurants was seeking a buyer for the struggling casual-dining brands prior to filing for Chapter 11 bankruptcy protection in early April. According to a May 26 bankruptcy filing, the purchase price includes $25 million to be credited against the debt owed by the seller to the buyer, plus $50,000 in cash and $4.5 million in assumed liabilities. The buyer said it is “still examining the various unexpired leases it will seek to assume and assign; however, it has committed to assume at least [45] of the existing nonresidential real property leases,” the filing stated.

Food Lion to buy 62 Bi-Lo, Harveys stores from Southeastern Grocers

Ahold Delhaize USA’s Food Lion grocery chain plans to acquire 62 Bi-Lo and Harveys Supermarket stores and a distribution center from Southeastern Grocers. Financial terms of the deal, announced Wednesday, weren’t disclosed. Plans call for the acquired stores — 46 Bi-Lo and 16 Harveys locations in North Carolina, South Carolina and Georgia — to remain open under those banners until the transaction is finalized in the first half of 2021, pending customary closing conditions, and then be converted to Food Lion stores. With the acquisition, Food Lion will have nearly 700 stores in the Carolinas and Georgia, bolstering the Southeastern market share of Ahold Delhaize USA, whose other chains — Stop & Shop, Giant Food, The Giant Company, Hannaford and online grocery service Peapod — serve the Mid-Atlantic, Northeast and New England regions.

Home & Road

RH CEO: Time to expand

Coming off a strong 2019, RH chairman & CEO Gary Friedman outlined the company’s plans to grow beyond retail and hospitality in the post-pandemic era. In a letter to shareholders, Friedman envisions creating “an ecosystem of products, places, services and spaces that elevate and establish the RH brand as a global thought leader, taste and placemaker.” He added: “As we move forward past the dark days of the pandemic, let this be a pivot point where we once again rise up. It is not a time to shelter and shrink, it is a time to expand and shine.” Elements of the path forward include expanding RH’s hospitality penetration into RH Guesthouses, offering bespoke hospitality experiences like RH Yountville, and RH3, the company’s luxury yacht that is available for charter in the Caribbean and Mediterranean.

Tuesday Morning secures loan as part of bankruptcy proceedings

Tuesday Morning Corp. is partnering with B. Riley Financial to help support the retailer’s reorganization through bankruptcy. The off-price home goods retailer, which filed for Chapter 11 bankruptcy protection on May 27, said it has obtained a commitment from BRF Finance Co., an affiliate of B. Riley Financial, for $25 million of debtor-in-possession to support operations during Chapter 11 bankruptcy. Tuesday Morning, which plans to permanently close about 230 of its 687 stores, said the funding is part of its $100 million DIP agreement with its existing lenders. The company is seeking to restructure under Chapter 11 after COVID-19-related store closures slammed its business.

Jewelry & Luxury

The Great Diamond Glut: Miners Stuck with Gems Worth Billions

In one of the world’s biggest diamond vaults, hidden inside a nondescript office compound on the dusty outskirts of Botswana’s capital, the precious stones just keep piling up. Owner De Beers, which mines and auctions most of its gems in the southern African nation, has barely sold any rough diamonds since February. Neither has Russian rival Alrosa PJSC. Now, as the coronavirus restrictions that froze the global industry for months begin to lift, the unsold diamonds present a dilemma: how to reduce billions of dollars’ worth of stocks without undermining the nascent recovery.


LVMH takes a new look at proposed $16.2B Tiffany merger

The planned $16.2 billion acquisition of American jeweler Tiffany by Parisian conglomerate LVMH Moët Hennessy Louis Vuitton appears to be on the rocks. The companies had touted their deal when they announced it in November as beneficial to both, strengthening LVMH’s luxury jewelry portfolio and providing Tiffany with much-needed resources to achieve its aims for long-term growth. Tiffany shareholders in February signed off on the plan, which was expected to close right about now.


The world’s largest jewelry maker commits to using 100% recycled silver and gold

When you recycle an old mobile phone, there’s a growing chance that the precious metals inside could be turned into jewelry. Pandora, the world’s largest jewelry brand by volume, is moving completely away from newly mined silver and gold in its products—and to reach a goal of 100% recycled silver and gold by 2025, one of the sources it turns to will be old electronics.

LVMH Promotes Frédéric Arnault to CEO of TAG Heuer

As a part of an ongoing management shuffle within its stable of brands, LVMH announced this morning that it’s appointed Frédéric Arnault the new CEO of watch brand TAG Heuer, effective July 1. Arnault helmed the design phase of the brand’s latest Connected watch, and the company said in a statement that his new role will be pivotal in “supporting innovation and accelerating the development of TAG Heuer.”


Office & Leisure

AMC Theatres has ‘substantial doubt’ it can remain in business

AMC Theatres, the world’s biggest movie theater chain, said on Wednesday that it has “substantial doubt” it can remain in business after closing locations across the globe during the coronavirus pandemic. The theater chain, which closed its theaters earlier this year, expects to have lost between $2.1 billion and $2.4 billion in the first quarter. The company also said that its revenue fell to $941.5 million, which was down roughly 22% from $1.2 billion in the same quarter last year. This quarter, the situation has gotten substantially worse. “We are generating effectively no revenue,” the company said in a regulatory filing Wednesday. AMC will continue to monitor the “potential lifting of various government operating restrictions,” but added that the chain has serious challenges even if restrictions are lifted. That includes studios holding back new films from being shown.

Build-A-Bear Workshop turnaround stalled by COVID-19

In preliminary results for the first quarter ended May 13, Build-A-Bear reported a loss of $21.2 million, or $1.42 per share, after net income of $1.2 million, or $0.8 cents per share, in the year-ago period. Revenue plunged some 45% to $46.6 million, from $84.4 million last year.  The retailer said its e-commerce continues to gain momentum with growth rates increasing to triple-digit levels. It also recorded its highest single-day ever of online demand with the initial offering of a stuffed animal based on a character from Disney+ series “The Mandalorian.” To support the increased digital demand, Build-A-Bear said it rapidly evolved its order fulfillment processes and expedited a number of new efforts, including adding a chat-bot to help manage consumer inquiries, an online waiting room to support high site traffic and a “buy online, ship from store” program to complete orders from select store locations.

Michaels swings to loss amid closed stores; ‘encouraged’ by recent trends

The Michaels Cos. swung to a first-quarter loss and missed bottom and top-line expectations as its stores were shuttered temporarily during COVID-19 pandemic. The arts and crafts retailer reported a net loss of $63.5 million, or $0.43 a share, in the quarter ended May 2, compared to income of $37.7 million, or $0.24 a share, in the year-earlier period. Sales decreased to $799.9 million from $1.094 billion. Same-store sales fell 27.6%. Michaels rolled out new omnichannel capabilities during the quarter, including curbside pick-up and same-day delivery, expanded ship from store and BOPIS and enabled in-app purchases.  The new offerings helped drive 296% e-commerce growth. As of June 4, Michaels has reopened approximately 1,000 of its 1,273 stores, with enhanced customer and employee safety measures in place. It expects that “substantially” all of its stores will be open by the end of June.

Party City plans debt swap

Party City Holdco Inc. is hoping to erase about half of its debt. The retailer has proposed a debt-for-equity swap with bondholders that would erase about $450 million of its approximately $850 million debt. In addition, Party City is planning to raise $100 million in new capital to increase its financial strength and help fund the company’s global operations and ongoing transformation initiatives. The deal would give the bondholders a 19.9% equity interest in the retailer, along with two new bond issues totaling $285 million, with maturity dates in 2025 and 2026. Party City plans to introduce a rights offering. It will include the right to purchase a pro-rata portion of $50.0 million aggregate principal amount of 15.00% senior secured notes due 2025. Party City’s retail operations include approximately 875 specialty retail party supply stores (including franchise stores) throughout North America operating under the names Party City and Halloween City, and e-commerce websites.

Technology & Internet

Grubhub has two new suitors, Just Eat Takeaway and Delivery Hero, as Uber talks continue

Grubhub is fielding interest from at least two European food delivery companies as antitrust concerns have clouded the chances of an Uber acquisition, according to people familiar with the matter. Netherlands-based Just Eat and German company Delivery Hero have expressed interest in merging with Grubhub, according to people familiar with the matter, who asked not to be named because the discussions are private. U.S. food delivery services have struggled to make money as executives have talked openly of consolidation. Grubhub, with a market valuation of about $5.4 billion, has been in talks with Uber on a sale. Those discussions are ongoing and may still result in a deal.


Alibaba launches a series of 20 virtual trade shows

Alibaba Group’s, its global B2B online marketplace, today launched a multi-pronged program—highlighted by a series of 20 online trade shows starting next month—designed to build on the growing demand for online commerce by pandemic-hit businesses based in the United States. On, the volume of commerce transactions has “grown more than 85%” since COVID-19 started to impact business in general. Alibaba’s fastest-growing market for new sellers and buyers is the United States, which has led that growth since Alibaba opened its global B2B marketplace to U.S. Sellers last July. Now, Alibaba is out to build on that growth with three new services: 1) Online Trade Shows USA, 2) Alibaba Payment Terms and 3) Freight.


Finance & Economy

Consumer Spending Trickles Back as U.S. Reopens, Survey Says

As the U.S. slowly begins to reopen, consumers are getting somewhat more comfortable with spending, including on discretionary items, and that’s good news for retailers and brands.  The latest weekly shopper survey, which found that spending intentions improved to their highest level since early March (even though they’re still below pre-pandemic levels from February). Nearly 80% of respondents received a stimulus check, and more than half spent it—largely on staples, but also on other nonessential categories, including apparel, beauty and home furnishings and improvement.

U.S. productivity falls at 0.9% rate in first quarter

U.S. productivity fell at a 0.9% rate in the first three months of this year, a smaller decline than first estimated, while labor costs rose at a slightly faster pace.  Productivity, the amount of output per hour of work, has lagged over the past decade, a troubling development that economists have been unable to adequately explain. Productivity is the key to rising living standards, and the slow pace of growth in recent years has been a major reason that wage gains have lagged.