Walmart is serious about growing its online marketplace business. The retailer has teamed up with Shopify to enable sellers from the platform to sell their goods on walmart.com. The agreement between the two companies is potentially bad news for Amazon.com. Walmart is the second biggest e-commerce site in the U.S. and growing its business at a rapid pace (74 percent in the last quarter). Shopify is the second largest online platform in the country with more than one million companies.
Jeff Clementz, vice president, Walmart Marketplace, wrote in a company blog that the retailer is committed to growing its third-party seller base and is focused on recruiting small and medium businesses with product assortments that complement its own and with stellar records of customer service. Initially, 1,200 Shopify sellers will list products for sale on walmart.com.
Research published earlier this year by Tinuiti puts the number of third-party sellers on Walmart at 33,000. Fifty-seven percent of Amazon shoppers also shop on walmart.com. Shopify sellers will be able to “seamlessly list” products for sale on Walmart’s site, according to Mr. Clementz’s post. A spokesperson for Walmart told RetailWire that Shopify sellers “can apply to utilize Walmart Fulfillment Services (WFS).” The service is positioned as a low-cost way for third-parties to use Walmart to pick, pack and ship items ordered from walmart.com.
Discussion Questions: What is your take on the significance of the Walmart/Shopify deal? What will it mean for Amazon and others such as Target that also have online marketplaces?
Comments from the RetailWire BrainTrust:
This represents a fantastic opportunity for Walmart to ramp up their assortment in a decidedly non-Amazon way which is to closely vet all incoming merchants. All merchants through this system (like their regular onboarding channels) will be monitored. Thus avoiding the problems that Amazon has faced with having an open-door policy: counterfeiting, gray market resellers, and fake reviews being the most concerning. However, Walmart only plans to add 1,200 new merchants to their platform via this initiative this year. Either that is a comment designed to downplay their hand, or it will be a drop in the ocean versus the ocean of sellers Amazon recruits each month.
Kiri Masters, Founder and CEO, Bobsled Marketing
Walmart proves once again, the path to dominating retail will require continued investment in digital partnerships, supply chain collaboration, and data monetization strategies that too many other retailers still lack the courage (vision or cash) to “lean in” on. Kudos to Walmart for continued smart investments, even in the era of COVID-19. The gloves were off long ago versus Amazon. Walmart has been all in on digital transformation for years now, with a superior supply chain and brick and mortar foundation, now leap-frogging other traditional retailers still sitting on the sidelines.
Brent Biddulph, General Manager, Retail & Consumer Goods, Cloudera
This year’s e-commerce wars are my favorite reality show. Since splitting with Jet.com, Walmart faced an urgent need for a new partner to catapult its e-commerce strategy into the 2020s. Partnering with Shopify helps Walmart access tech expertise, scale fast and boost assortment variety. Notably, Walmart could finally win with young, urban shoppers – some of whom may also be Shopify vendors. This play could boost their loyalty by deepening Walmart’s commitment to small businesses and local communities. Shopify wins by helping its small vendors access a massive market, especially since the pandemic ignited a shift to value shopping.
Lisa Goller, Content Marketing Strategist
This relationship will benefit both partners, but Walmart is definitely getting the best end of the deal. Toby Lutke has built a unique and powerful platform in Shopify that makes large scale e-commerce as accessible as eBay and Marketplace. Walmart online shoppers and resellers will certainly benefit from that.
Ben Ball, Senior Vice President, Dechert-Hampe
Never underestimate Walmart! They have a specific goal in mind for the percentage of revenue they want to have by 2024 and they have the logistics bones to make it happen. The combination of store fulfillment may make the difference in their approach and will be very interesting to watch. Fasten your seatbelts!
Zel Bianco, President, founder and CEO Interactive Edge
I think this is yet another good move by Walmart – they seem to be out-Amazoning Amazon. Logistics is a huge challenge for small online retailers, and so utilizing Walmart’s significant logistics capabilities will be extremely helpful. This coupled with Shopify’s leading online platform makes for a strong offering. Given the bad press Amazon has received about how they harvest information from their third-party “partners” to inform their own products, this definitely puts Walmart in the preferred partner category.
Mark Ryski, Founder, CEO & Author, HeadCount Corporation
Headline of the Week
Just over three months after making its filing, Albertsons Cos. has launched an initial public offering of 65.8 million shares of common stock. Boise, Idaho-based Albertsons said late Thursday that the IPO, sold by some of its stockholders, is expected to be priced at $18 to $20 per share. The company noted that it’s not selling any shares in connection with the common stock offering. The nation’s second-largest supermarket operator, Albertsons has been approved to list its common stock under the ticker symbol “ACI” on the New York Stock Exchange (NYSE). Two previous attempts by Albertsons to become public fell through. In 2018, the company attempted to go public via a $24 billion merger with Rite Aid Corp., but the deal collapsed after investor pushback. Investors also tried to take Albertsons public following its 2015 merger with Safeway but then ended up pulling the offering amid lackluster market conditions for retail stocks. Albertsons is owned by an investment group led by private equity firm Cerberus Capital Management.
Apparel & Footwear
Ascena Retail Group, the owner of the Ann Taylor and Lane Bryant apparel chains, is discussing a potential bankruptcy filing with lenders after its business was thrown into disarray by the Covid-19 pandemic. The Chapter 11 filing, which could come as soon as July, would allow the company to keep some of its brands operating while it seeks to sell others. Ascena is considering selling three of its brands in a court-supervised sale process, including Catherines, while keeping Ann Taylor and Loft as part of the company when it emerges from bankruptcy. Ascena’s lenders are starting confidential talks on a deal that would see their holdings exchanged for a majority stake in the reorganized company. Mahwah, New Jersey-based Ascena didn’t respond to written messages and phone calls to its public relations and investor relations representatives. The company is getting advice from restructuring lawyers at Kirkland & Ellis and investment bank Guggenheim Securities.
Online fashion retailer Boohoo has agreed to buy the online businesses of Oasis and Warehouse for £5.25m. Boohoo made the announcement as it said online sales rose by 45% in the three months to May, partly boosted by demand for athleisure items during lockdown. Manchester-based Boohoo also owns PLT and Nasty Gal. Earlier this year, it bought struggling brands MissPap, Karen Millen and Coast. In April, Oasis and Warehouse went into administration losing 1,800 jobs. The brands were forced to shut their 90 UK stores in March because of the coronavirus lockdown, which also closed its 437 concessions in department stores including Debenhams and Selfridges. The brand and stock were bought by Hilco Capital, which has now sold them on to Boohoo.
Things are not looking good for Francesca’s. In a Securities and Exchange Commission filing, the accessories and apparel retailer warned that its liquidity has been adversely impacted by negative operating results due to the pandemic and “there is no assurance that we will have sufficient liquidity to continue operations.” Francesca’s, which has 703 stores, had been struggling pre-pandemic with declining sales and profits for the past couple of years amid declining mall traffic. In early May, the company issued a “going concern” warning and floated the idea of bankruptcy. In its latest SEC filing, Francesca’s said that it may be required to delay, reduce, and/or cease operations and/or seek bankruptcy protection if unable to generate or obtain the financing it needs to continue doing business. Francesca’s also said that it will delay filing its first-quarter earnings report because it needs additional time to assess the impacts of the COVID-19 pandemic on its “long-lived assets for the quarter, including the related income tax effect.”
Citing the challenges brought on by the COVID-19 pandemic and the uncertain economic outlook, U.K. apparel brand Long Tall Sally is winding down its operations after 44 years in business, Chief Operating Officer Alison Doherty said in a blog post. The company, which had run stores in the U.S., the U.K. and elsewhere, now runs dedicated country-based e-commerce sites and ships globally. The company is not in bankruptcy and is open to finding a buyer, according to its website. The women’s apparel retailer, which caters to consumers 5’8″ and taller, also noted that it had closed all its stores in 2018 as competition grew fierce in 2017, and has been operating online-only since. Long Tall Sally aims to continue operating through August, Doherty said.
Athletic & Sporting Goods
24Hour Fitness filed for bankruptcy protection as the gym chain deals with the fallout from closures due to coronavirus. In an affidavit, Daniel Hugo, chief restructuring officer, wrote, “Put simply, the COVID-19 pandemic upended the debtors’ operating model leaving the debtors without a source of revenue to fund their operations.” The Company, based in San Ramon, CA, and owned by private-equity firm AEA Investors and the Ontario Teachers’ Pension Plan, filed for Chapter 11 in the U.S. Bankruptcy Court in Delaware. It expects to secure about $250 million in debtor-in-possession (DIP) financing.
Skier visit numbers to U.S. ski destinations totaled 51.1 million for the 2019/20 ski season, down almost 14 percent over the 2018/19 season according to a report from The National Ski Areas Association (NSAA). A skier visit is counted every time a skiing or snowboarding guest visits a ski area or resort. The majority of the 470 U.S. ski areas closed in mid-March due to COVID-19, eliminated the critical spring break visitation period. Had the season continued along its track prior to the outbreak, the 2019/20 season would have been the fourth-best on record since the 1978/79 season when NSAA began surveying visitation numbers. “To have two years in a row potentially ranked in the top five seasons ever shows the strength of the industry,” said Kelly Pawlak, NSAA president and CEO, referring to the 2018/19 season and the truncated 2019/20 season.
Cosmetics & Pharmacy
In a late Friday announcement, GNC Holdings Inc. announced a temporary reprieve for two impending debt maturities. At immediate issue for the nutritional supplements retailer are two term loans and a credit facility that could be accelerated from a deadline of August 10 to June 15, if “current conditions are not satisfied,” according to an announcement by the company. GNC announced that it had reached an agreement to extend that deadline from June 15 until June 30. “The Company continues to explore all strategic options available to it to refinance and restructure its debt to drive business continuity and protect the long term financial interests of the company and the interests of the company’s key stakeholders,” stated GNC in its in announcement. “GNC will share additional updates when the company’s board of directors has approved a specific alternative or transaction or determined that further disclosure is appropriate or legally required.” GNC had signaled that filing for Chapter 11 protection from creditors could be an option and in early May reported a net loss of more than $200 million for the first quarter of 2020.
Walmart continues to expand its digital health capabilities. The retail giant announced it acquired the technology platform, patents and intellectual property of CareZone, which developed an app that helps people manage their health information and medications. Individuals can also use the app to scan labels or insurance cards to speed and simplify the process. “We’re also excited to welcome the members of CareZone’s product and technology team that built their app, and who will help us innovate and integrate faster with Walmart’s existing systems,” Lori Flees, senior vice president, health and wellness at Sam’s Club, and Sean Slovenski, senior vice president of health and wellness at Walmart U.S. said “The technology and team members joining Walmart will augment our current health & wellness capabilities and support our focus on digital health care solutions process.” CareZone, which also operates an online pharmacy that puts customers’ medications into pill packs and delivers them to patients via mail, will remain a separate company unrelated to Walmart.
Joël Palix, former Chief Executive Officer of Feelunique.com and Clarins Fragrance Group, has made a minority investment in Lashilé Beauty. Marseille-based, Lashilé Beauty was founded by Yoann Assouline, Johan Adida and Fanny Adida in spring 2019. The nutri-cosmetic brand offers supplements in the form of “gummies,” which are positioned as playful and as simplifying supplement routines. The brand offers Good Hair, Good Sun, Good Skin, and Good Detox gummies. It recently launched three new products to promote weight loss. The brand sells online via its own e-commerce and pharmacies’ platforms. Joël Palix is the founder of boutique consultancy Palix Unlimited, and former Chief Executive Officer of Feelunique.com and Clarins Fragrance Group. “Lashilé’s concept, which links protection and immunity with sensuality, is innovative and perfectly adapted to new consumers’ expectations,” Palix said in a statement.
L’Oréal announced the signing of an agreement to acquire Thayers Natural Remedies, a US-based natural skincare brand, from Henry Thayer Company. PE Hub reported the deal is worth $400 million. Headquartered in Easton, Connecticut, Thayers Natural Remedies has a strong skincare heritage and offers a portfolio of high-quality products including toners and astringents. Founded in 1847 by Doctor Henry Thayer, the brand is best known for its iconic Witch Hazel Aloe Vera Formula Facial Toner, a best-selling product popular among a diverse group of consumers. The brand has expanded its distribution from natural grocery stores to a multichannel strategy which includes mass and beauty retailers, drugstores, and e-commerce. L’Oréal has devoted itself to beauty for over 100 years. With its unique international portfolio of 36 diverse and complementary brands, the Group generated sales amounting to 29.87 billion euros in 2019 and employs 88,000 people worldwide.
Discounters & Department Stores
“A classic case of buyer’s remorse” is how Taubman Centers characterized Simon Property Group’s termination of its agreement to buy an 80% ownership interest in Taubman for $3.6 billion. Taubman on Wednesday filed its answer to Simon’s move in the Sixth Circuit Court in Oakland County, Michigan, according to court filings emailed to Retail Dive. Taubman argues that when their deal was reached “the parties and the world were well-aware of the risks of the novel coronavirus pandemic.” In fact, the agreement was “to allocate the risk of global pandemics to the Simon Parties, knowing full well that there was a pandemic raging in the world. The Simon Parties accepted this risk,” according to court documents.
Walmart is taking the idea that COVID-19 is the greatest experimentation hall pass in retail history to heart. In the span of a few months, Walmart, across its brand portfolio, has launched contactless payment via Walmart Pay, rolled out concierge shopping at Sam’s Club, formed new partnerships with ThredUP and Shopify, and, last but not least, this week converted all its conveyor belt checkout lanes to self-checkout counters in one of its Fayetteville, Arkansas stores. Now, before anyone gets carried away, the Fayetteville Walmart store is not a “self-checkout only store” (my quotes). According to a Walmart spokesperson, Walmart customers will still “be able to checkout in all the same ways they could before the redesign – that includes having an associate scan and bag their items.”
Target said Wednesday it is raising its minimum wage to $15 per hour and will give all hourly employees a one-time bonus of $200. The $2 per hour raise will apply to employees at stores and distribution centers, beginning July 5. Target had temporarily raised its wages by $2 an hour in March as coronavirus cases rose. The bonuses, which recognize part-time and full-time employees’ work during the pandemic, will be paid out at the end of July, according to the company, which has more than 350,000 employees and nearly 1,900 stores across the U.S.
Bankrupt J.C. Penney has kicked off liquidation sales at 136 locations across the country, the department store chain announced Wednesday morning, as it has been able to reopen many locations with local lockdown restrictions easing during the coronavirus pandemic. Deals on merchandise will range between 25% and 40% off, it said, adding that “all merchandise is on sale.” Penney said all sales will be final beginning June 25, meaning no returns are allowed. “Due to the name recognition and goodwill of this brand, we encourage consumers to shop early to take advantage of the best selection of products as we expect merchandise to sell very quickly,” a company spokesperson said in a statement.
Emerging Consumer Companies
Stockwell, the smart vending machine that initially lunched as Bodega and changed names in response to immediate backlash, is shutting down. Founded in 2017 by former Google employees, Stockwell built a network of 1,000 smart vending machines. These machines work like advanced hotel minibars, with sensors that detect what is removed and users charged through an app. Stockwell had raised at least $45 million in funding from NEA, GV, DCM Ventures, Forerunner, First Round and Homebrew.
Cake, a Los Angeles-based sexual wellness company, has raised $1.4 million in seed funding from investors that include Brian Spaly, co-founder of Trunk Club and Bonobos, Roth Martin, co-founder of Rothy’s, Brand Foundry Ventures, and Finn Capital. Products are available a la carte and in kits.
Hydrow, the Live Outdoor Reality™ (LOR) rower, announced a $25 million investment led by L Catterton, with participation from the brand’s other existing investors, including Rx3 Ventures. It brings the total capital raised to $52 million. Hydrow delivers a live on-river rowing experience at-home with instruction from world-class athletes streaming live on the water in cities such as Miami, London, and San Francisco.
Grocery & Restaurants
Dallas-based Borden Dairy, which filed for bankruptcy protection in January, has been scooped up by private equity giant KKR & Co. and an investment firm led by the former CEO of Borden’s biggest rival, Dallas-based Dean Foods. The two buyers created the entity New Dairy Opco LLC to buy nearly all of Borden’s assets, with Capitol Peak Partners leading the bid, according to court documents and people familiar with the matter. Gregg Engles, former head of Dean Foods, founded Capitol Peak in 2017.
Nestle SA is seeking options for its North American Waters business that includes such brands as Poland Spring, Deer Park, Ice Mountain and Arrowhead as well as a direct-to-consumer and office delivery service. The business generated approximately $3.6 billion in 2019, according to the company. At the same time the company affirmed its commitment to its international waters business. Perrier, S Pellegrino and Acqua Panna are the main brands within the international portfolio. Nestle has been aggressively paring its North American business. On June 9, the company announced plans to sell its Buitoni North American pasta business to a private equity company. In December 2019, the company sold its US ice cream business for $4 billion, and that same year it exited its company-owned direct-store delivery network for pizza and ice cream.
Home & Road
Furniture and home furnishings store sales picked up significantly in May, growing by 89.7% over April’s revised totals, which were down 48.4% from March 2020. In general, U.S. retail and food services sales were up month-over-month for May, enjoying a 17.7% increase from April’s revised total, according to the U.S. Department of Commerce report released today. May’s totals mark the first overall increase between months in two months, with advance sales total coming in at $485.5 billion, but year-over-year, sales were still down 6.1%. Combined retail trade sales excluding food services were also up, rising 16.8% from April 2020, but fell 1.4% below last year. Furniture and home furnishings store sales numbers benefited from widespread store reopenings as states lifted COVID-19 movement restrictions and a retail holiday, Memorial Day, which reportedly went well for many retailers. In total, furniture and home furnshings sales increased 89.7% from April’s preliminary $4.07 billion estimate, a figure that was revised up from the previously reported $3.3 billion, to total $7.72 billion in May. In May of last year, the sector posted $9.84 billion in sales for the month.
Mattress sales are improving by the week and average selling prices are increasing, an analyst says. In a new report, Piper Sandler presents a bullish view of trends in the mattress industry, noting that “broader demand (for mattresses) is back.” “Our channel work suggests sales trends in mattresses continue to improve sequentially by week with increasing average selling prices and surprisingly strong demand,” the firm wrote. “As consumer spending continues to shift to the home, we believe spending initially focused on living areas (upholstered furniture and outdoor patio) and has migrated toward the bedroom.” Piper Sandler wrote that, given the week-over-week sales strength and rising average selling prices, “we do not see improving sales as a stimulus or unemployment benefit dynamic. Instead broader demand is back.”
Jewelry & Luxury
Neiman Marcus Group, the storied retailer that filed for Chapter 11 in May, now says it’s on track to exit the bankruptcy process by the fall. On Tuesday, the Southern division of Texas bankruptcy court approved Neiman Marcus’ plan to access debtor-in-financing, with $250 million immediately available and an additional $150 million available after Sept. 4. “This financing provides us with ample liquidity to ensure business continuity as we gradually reopen our stores, invest in fall inventory, and fund the expansion of our digital offerings as we continue our journey to become the preeminent luxury customer platform,” said Geoffroy van Raemdonck, chairman and chief executive officer of Neiman Marcus Group, in a statement.
On Tuesday, Dominion Diamond filed a suit against Rio Tinto, its longtime partner in the Diavik Diamond Mine, over Rio’s management of the project—the latest sign of the tension between the two partners that has surfaced following Dominion’s April insolvency filing. Rio Tinto owns 60% of Diavik, based in Canada’s Northwest Territories. It manages its operation through subsidiary Diavik Diamond Mines Inc. (DDMI). Dominion owns the remaining 40% of Diavik.
The luxury industry will feel the fallout from the coronavirus crisis for the next two years if not longer, Chanel’s chief financial officer said on Thursday, warning the French fashion label’s 2020 revenues and profit would be significantly hit. Privately-owned Chanel, known for its tweed suits, quilted handbags and No.5 perfume, is one of the biggest luxury brands in the world alongside LVMH’s Louis Vuitton.
Pandora will no longer be sold at Jared, ending a long-standing relationship that was once significant for both parties. Since 2018, Signet has embarked on a strategy with focus on other brands than Pandora. As a natural consequence of the strategy, Signet plans to exit the partnership with Pandora within the next 12 months. The impact for Pandora will be negligible as its sales to Jared have decreased substantially in recent years.
Office & Leisure
AMC, the largest movie theater company in the U.S., is getting pushback from creditors, according to the Wall Street Journal, as it seeks to regain a foothold after being forced to shutter all of its U.S.-based cinemas during the coronavirus outbreak. On Wednesday, the Wall Street Journal reported that creditors, including David Einhorn’s Greenlight Capital, are refusing to go along with AMC’s debt swap proposal. Greenlight declined to comment on the report. The proposed debt swap would cut about $1 billion of AMC’s $5.1 billion in debt and needs unsecured bondholders to give up their claims at a discount and take securities valued at between 51 and 53 cents on the dollar, the publication reported. That would be backed by a second-priority claim on collateral, including AMC’s brand name and other assets. Under the proposal, the Wall Street Journal said, investor Silver Lake would exchange its convertible bonds into new securities with a first priority claim on assets. AMC plans to reopen most of its U.S. and U.K. theaters ahead of July 17, however, there are still questions about if moviegoers will flock back to cinemas.
As people flock to video games and social networks to fight boredom during the pandemic, investors in the company that owns two of the biggest lockdown hits are betting that those habits will stick. Startup Epic Games Inc., which developed battle game Fortnite and acquired networking app Houseparty, is close to raising a $750 million round of funding at a valuation of about $17 billion, according to people familiar with the matter. New investors T. Rowe Price Group Inc. and Baillie Gifford will contribute to the round, while existing investors including KKR & Co. will also participate, the people said, asking not to be identified as the details aren’t public. The valuation, which includes the new funding, is a bump up from the $15 billion valuation the company garnered in 2018. The funding round isn’t finalized and some of the details could still change, the people said. The round is one example of how, even as many startups lay off employees and scale back operations, there could still be opportunities for companies that provide what many now see as essential distractions.
Petlove, which this month celebrates 21 years as the largest online pet retail brand in Brazil, announced that it has received a significant strategic investment from the Latin America fund of L Catterton, the largest and most global consumer-focused private equity firm. With extensive experience investing in the pet and e-commerce categories across the world, L Catterton will partner with the Company’s Founder and Chief Executive Officer, Marcio Waldman, and fellow investors, SoftBank, Tarpon, and Monashees to accelerate Petlove’s growth and expansion and help drive the Company’s strategic initiatives. Terms of the transaction were not disclosed. This partnership will strengthen Petlove’s transformation and accelerate the Company’s technological advancement to drive offline to online consumption across Brazil.
Technology & Internet
Walmart has a new ally in its fight against Amazon: Shopify. The world’s largest retailer has inked a new partnership with Shopify that lets select Shopify merchants offer their products on Walmart’s marketplace. The rationale behind the deal was to leverage both companies’ expertise. Millions of online merchants are already on Shopify, and this partnership allows them to list their items on Walmart’s online marketplace without using new external tools. It’s a clear move by Walmart to try and better compete with Amazon. Walmart’s marketplace ambitions have been slow but steady. When it first launched in 2009, it had fewer than 1 million SKUs available online. Today, the retailer’s total e-commerce presence represents more than 75 million. In 2019, Walmart added 10,000 new sellers to its marketplace, bringing the total last November to over 32,000. Now, the big box retailer is trying to do two things at once: grow its marketplace but solicit merchants who will add to the value of the overall Walmart marketplace proposition.
China’s two biggest e-commerce giants Alibaba and JD.com handled $136.51 billion of sales through their platforms in 24 hours, during one of the country’s biggest shopping events. Known as 618 because it falls on June 18, the festival was being closely watched for signs about the health of the consumer in the world’s second-largest economy, as it looks to recover from the coronavirus pandemic. In China, there are two major shopping events. The first, 618, was started by JD.com. The second, Singles Day on Nov. 11, was created by Alibaba. But nowadays, both e-commerce firms join in on the promotions amid rising competition in the country’s online shopping space. The record numbers on 618 may point to a recovery with the Chinese consumer.
Finance & Economy
Cost-strapped renters and homeowners won’t get kicked out of their homes this summer if their properties are backed by Fannie Mae or Freddie Mac, according to the Federal Housing Finance Agency. The government-sponsored entities that guarantee millions of mortgages extended their foreclosure and eviction protections until Aug. 31 for single-family properties because of the coronavirus pandemic. The move affects tens of millions of Americans: In 2019, almost 43% of new mortgages were backed by Fannie or Freddie. In the 12 preceding years, that share was higher. The original expiration date was June 30 for properties with mortgages backed by the pair. “To protect borrowers and renters during the pandemic we are extending the enterprises’ foreclosure and eviction moratorium,” said Mark Calabria in a press release, director of the FHFA, which oversees Fannie and Freddie. “During this national health emergency, no one should worry about losing their home.”
Employers added jobs in 46 states last month, evidence that the U.S. economy’s surprise hiring gain in May was spread broadly across the country — in both states that began reopening their economies early and those that did so only later. Unemployment rates fell in 38 states, rose in three and were largely unchanged in nine, the Labor Department said Friday. The disparities ranged from Nevada, with the highest rate (25.3%), Hawaii (22.6%) and Michigan (21.2%) to Nebraska (5.2%, the lowest) and Utah (8.5%). The overall U.S. unemployment rate in May was a still-high 13.3%, a decline from 14.7% in April.
Two U.S. Federal Reserve officials sounded increasing pessimism on Friday on the swiftness of any economic recovery from the novel coronavirus epidemic and warned the unemployment rate could rise again if the disease is not brought under control. The central bank already made clear it expects a full economic healing from the impact of the virus to take years as it kept interest rate near zero at its policy meeting last week. But nascent signs of recovery in U.S. economic data, with better-than-expected job gains and retail sales for the month of May, had fueled some hopes that the United States could bounce back more quickly. Fed officials pushed back on that view on Friday and cautioned against reopening the economy too hastily after the end of state lockdowns aimed at containing the virus, which has killed more than 118,000 Americans.