On March 16th, the day before the U.S.’s first statewide stay-at-home order was announced (in California), one Consumer industry observer expressed serious concern for the sporting goods industry in an article entitled “COVID-19 Isn’t Playing Games. Neither Is Anybody Else.” The writer noted that the share price of Dick’s Sporting Goods (DKS) had fallen nearly 30% in the prior four trading days, and argued that sales of both sports equipment and fan gear would be hurt by the nationwide cancellations of scholastic and professional sports in the spring and summer. If you had read that article and promptly bought $1,000 of DKS, that investment would now be worth $2,184. Oops. Who was that writer, and how could he have been so wrong? Ahem… It was me.
First, this example lays bare the difference between stocks and fundamental company performance, and my March 16th article was in no way an investment recommendation for or against DKS. This argument about whether the stock market has come unhinged from the fundamental economy has been raging for months among investors and economists. Since mid-March, a period in which we saw the single steepest one-quarter drop in GDP in U.S. history (2Q GDP declined 32.9%), the S&P 500 is up 42%.
But this article is not about that. This is about the areas of sporting goods I didn’t think about in March that have surprised and thrived since the onset of COVID-19. Overall, sales have been clearly negatively impacted by store closures and the cancellation of athletics at the school and professional level. To stick with the Dick’s Sporting Goods example, net sales at the retailer decreased 31% y/y in the first quarter. However, consumers haven’t surrendered to indoor isolation, they haven’t let the closure of gyms and fitness chains stop them from getting a workout, and they haven’t let store closures stop them from spending.
First, many consumers have turned to outdoor recreation to fill the hole left by organized sports, indoor exercise, and summer travel. Categories like camping gear and backyard recreation have been hot for months. The San Francisco Chronicle reports that camping products at REI are up 30% to 100% versus this time last year as consumers both head to the mountains and go camping in the backyard. Escalade Sports, a manufacturer and distributor of recreational equipment ranging from archery sets, to ping-pong tables, to trampolines reported this month that second quarter sales increased 50% due to the “changing consumer landscape and return to home recreation and entertainment…”. And for those of you with small children, you may have found out the hard way that inflatable above-ground pools are this summers’ unobtanium.
At-home exercise has also taken off as consumers have sought out alternatives to gyms. Momentum in this space is perhaps most visible at Peloton, which couldn’t keep up with demand at the onset of the pandemic, forcing certain customers to wait months for bike purchases to be fulfilled – its stock is up 133% this year. Strategic corporate interest in high-tech at-home fitness has been clear since the beginning of the pandemic as well, including lululemon’s June announcement that it will acquire Mirror for $500 million, and Apple’s announcement two weeks ago that it will launch an at-home fitness subscription service. But even simple hand weights have been difficult to come by in large sporting goods retailers since early spring.
Beyond consumers’ resilience and creativity, the one thing that has enabled sporting goods to remain strong is ecommerce. With stores closed, shoppers have flocked online to purchase their gear. Ecommerce research firm Comscore reports that traffic to the websites of large sporting goods retailers such as Dick’s, Academy, Bass Pro Shops, Cabela’s, and Camping World in May was collectively up 86% y/y. Going back again specifically to Dick’s, the company reported that in the weeks following its store closures, its ecommerce sales increased 210%, and contactless curbside pickup accounted for 40% of total online sales.
We will learn still more about this category’s resilience in the coming days and weeks as some of them report second quarter earnings, including Dick’s, which reports on Wednesday. But in the meantime, it is clear that people have found ways to remain active this spring and summer. “Lock down” has not meant “game over.”
Headlines of the Week
U.S. Existing-Home Sales Surged in July by Most on Record
U.S. sales of previously owned homes surged by the most on record in July as lower mortgage rates continued to power a residential real estate market that’s proving a key source of strength for the economic recovery. Cheaper borrowing costs, pent-up demand and greater interest in suburban markets following the pandemic-related shutdowns earlier in the year are so far generating plenty of momentum in housing. At the same time, lean inventory, higher asking prices, and the coronavirus itself represent hurdles to further outsize gains.
Home Depot’s quarterly comp-sales soar 25% as retailer tops Wall Street
If there were any doubts that Home Depot sales would benefit from the home-focused environment ushered in by the global pandemic, they were erased by the company’s second-quarter performance. The home improvement giant reported better-than-expected quarterly profit and strong sales growth as consumers continue to invest in home remodeling and repairs. Customer transactions, average ticket size, and sales per retail square foot all saw double-digit growth over the year-ago period. Home Depot’s net earnings for the quarter rose to $4.3 billion, or $4.02 per share, for the quarter ended Aug.2, from $3.5 billion, or $3.17 per share, in the year-ago period. Analysts were expecting earnings per share of $3.71.
Apparel & Footwear
Gap closing flagship store on San Francisco’s Market Street
It’s going to be more difficult to pick up a pair of khakis at the last minute in San Francisco. Gap Inc. announced this week it is closing the flagship location at 890 Market Street and its store in the Embarcadero Center this month. The Gap Body store on Chestnut Street and the Gap store at Stonestown shuttered in July. The only remaining brick-and-mortar store in the city is the Chestnut location. “We are confident these closures will strengthen the health of our company moving forward,” Gap said in a statement Tuesday. The San Francisco-based clothing retailer, which owns several other brands including Banana Republic and Old Navy, is struggling amid a sinking economy triggered by the coronavirus pandemic.
L Brands warns that the holidays could be tough this year
With most stores reopened after closing due to the pandemic, Victoria’s Secret weighed down L Brands in the second quarter, when net sales fell 20% to $2.3 billion. Bath & Body Works sales rose 13%, thanks to 191% growth in e-commerce, with sales at company-owned stores in the U.S. and Canada falling 23%. Victoria’s Secret sales fell 39%, with sales at the company-owned stores falling 70% and e-commerce up 65%. The company swung to a $49.6 million net loss in the quarter, from net income of $37.6 million a year ago. The company warned that “traffic constraints imposed by social distancing protocols in stores and capacity restraints in our direct channel distribution centers” could hurt seasonal volumes, which historically have been triple what an average week delivers in the second quarter.
Payless making comeback online and off; plans 35 to 40 stores by 2021 yearend
Payless ShoeSource is readying its return to the U.S. retail scene. The discount footwear retailer filed for bankruptcy protection in February 2019 and went on to close its approximately 2,500 stores in North America and shut down its e-commerce operations.
(Payless international stores were not affected by the filing.) In January, Payless appointed a new management team and unveiled its strategy to turnaround the business and grow again in the U.S. later this year. The new team is led by CEO Jared Margolis, who previously served as president of CAA-GBG, the largest licensing agency in the world and a joint venture between Global Brands Group and Creative Artists Agency. Payless is now making plans to relaunch with a new e-commerce site as well as a new retail prototype, reported Women’s Wear Daily. The store will open in November, in Miami, which is home to the company’s new headquarters. The company intends to open 30 to 45 stores in the region by the end of next year, according to the report, which said that Margolis is signing all leases as percentage rent deals and will not take on spaces with traditional leasing terms.
Athletic & Sporting Goods
Fitness Retailer Sweaty Betty Is Preparing to Sell Itself
Women’s activewear retailer Sweaty Betty is preparing to put itself on the block, according to people with knowledge of the matter. The London-based company could fetch about 400 million pounds ($524 million) in a transaction, according to one of the people, who asked not to be identified because the deliberations are private. Potential suitors could include large retailers or a private equity firm, another of the people said. One of the company’s largest backers is consumer-focused private equity firm L Catterton, which invested in Sweaty Betty in 2015. Sweaty Betty was founded by Tamara Hill-Norton and Simon Hill-Norton and opened its first location in 1998. It has more than 60 stores across the U.K., U.S., Canada and Hong Kong, its website shows.
Under Armour Forges Strategic Partnership with Topgolf
Under Armour has announced a new strategic partnership with Topgolf Entertainment Group, a global sports and entertainment community that connects millions of people through experiences, innovation and fun. The partnership will see the two companies collaborate in the U.K. on a number of innovative projects to engage with fans and players, from events and new product launches, to powering the Topgolf Coach U.K. team through its industry-leading performance apparel. The Topgolf Coach U.K. coaches are the casual gamers’ first entry point to the full game of golf.
The Recreational Group Acquires Engineered Turf
The Recreational Group, a leading provider of residential and commercial surfacing products, has acquired Engineered Turf Inc., a fast-growing manufacturer of synthetic grass used in commercial and residential landscape, sport and putting green applications. Engineered Turf manufactures high-quality grass in more than 20 varieties, used for athletic fields, playgrounds, putting surfaces, lawns, pet care and more. All the products made in the Dalton, Ga. manufacturing facility use materials sourced from companies in the United States. Engineered Turf has managed to double their sales even through the pandemic. The Recreational Group oversees a diverse line of American made surfacing solutions, including XGrass, Tour Greens, VersaCourt and Swisstrax. The acquisition allows for vertical integration of all synthetic grass products from fiber through tufting to installation, which will result in enhanced quality control and product innovation.
Cosmetics & Pharmacy
The Detox Market Acquires Canada’s Clementine Fields
Green beauty retailer The Detox Market has acquired Canadian e-commerce company Clementine Fields. Founded in 2013, Clementine Fields is a natural beauty and wellness e-retailer in the Canadian market. Like most founders, Clementine Fields’ Ingrid Doucet and Tom Barnett became involved in the natural beauty space when one of them had a health crisis. The Detox Market was born from a love for purity and an eagerness to support communities in healthful lifestyles. Originally curated as a pop-up shop in 2010 on Abbot Kinney in Venice Beach, California, to introduce a few niche natural brands, The Detox Market has six locations spread over Los Angeles, Toronto, and New York. Specializing in skincare and beauty, The Detox Market is a one-stop-shop for those looking to remove toxicity from the beauty, wellness, health, and home products they use day today. The acquisition of Clementine Fields further establishes The Detox Markets position in North America as well as its strategy to grow its online consumer base.
Italmobiliare Buys Beauty Firm
Italian investment company Italmobiliare is investing 120 million euros (about $142 million at current exchange rates) to acquire an additional 60% stake in 400-year-old pharmaceutical laboratory Officina Profumo Farmaceutica di Santa Maria Novella. The move makes Italmobiliare the brand’s majority investor. Earlier this year, Italmobiliare acquired a 20% stake in the cosmetics maker, which employs more than 100 people and sells high-end products in 300 stores in the world. Last year, Officina Profumo Farmaceutica di Santa Maria Novella had sales of about $39 million (31 million euros). The company was started by Dominican Friars in the 16th century.
Estée Lauder 2020 Sales Drop 4%
Estée Lauder released its fiscal 2020 results ending June 30 that show a net sales decrease of 4% from $14.86 billion in fiscal 2019 to $14.29 billion, reportedly as a result of retail store closures due to the pandemic, according to the company. Net earnings reportedly also dropped from $1.79 billion last year to $0.68 billion. According to its fiscal report, the skin care category exceeded sales compared to any other category with a 26% increase in the first half of the fiscal year and a fiscal 2020 gain of 13%. The makeup, fragrance and hair care categories experienced declines ranging between 11% and 17% for the year.
Discounters & Department Stores
Inventory disruption roils TJX, Ross in Q2
The COVID-19 pandemic is smacking off-price retailers TJX Cos., (whose primary banners are Marshalls, TJ Maxx and HomeGoods), and Ross Stores (which runs Ross Dress for Less and dd’s DISCOUNTS) in what is normally a strength: inventory. The two reported results this week that revealed how inventory snafus and a dearth of e-commerce — the latter by choice — combined to tamp down sales even as stores reopened. The pipeline of cast-off goods from department stores and specialty retailers has been undermined by supply chain issues and those retailers’ own inventory troubles. As Ross stores reopened, for example, a pile-up of goods was enthusiastically snapped up by returning customers, but not easily replaced, according to Ross CEO Barbara Rentler.
The strategy behind turning department stores into warehouses
Fulfillment for e-commerce requires three times the warehousing space of traditional brick-and-mortar store inventory, given the greater variety of SKUs and space-intensive shipping and parcel operations. With e-commerce growing in the pandemic, supply chain players are scooping up space where they can find it, especially if it’s close to areas with high population density. Amazon is reportedly in talks with Simon Property Group to take over mall spaces left vacant by closed department stores, namely those that once belonged to J.C. Penney and Sears. An anonymous source told The Wall Street Journal that Amazon would turn these spaces into online fulfillment centers.
Kohl’s sees billions in market share up for grabs as retailers go bankrupt, shut stores
Kohl’s sees an opportunity in the coronavirus pandemic to steal market share from struggling retailers and win over new customers as competitors go bankrupt and liquidate their stores. “We’re really set up to capture what will be billions of dollars market share opportunity in the future,” Chief Executive Michelle Gass said Tuesday during a conference call. She said the company is “actively pursuing opportunities to capture dislocated market share from competitors and store closures,” with its more than 1,100 locations, 95% of which are situated outside of enclosed shopping malls. Much of the malaise in retail of late has stemmed from traditional mall-based retailers such as department stores and apparel brands.
U.S. mall owner CBL strikes restructuring deal with lenders to slash debt
U.S. mall owner CBL & Associates announced Wednesday it has reached a restructuring support agreement with debt holders — a bid to boost its balance sheet with its malls getting hammered by the Covid-19 crisis. The Chattanooga, Tennessee-based real estate investment trust, which owns more than 100 retail centers, said in a securities filing that the terms of the agreement provide for a “comprehensive restructuring” of its capital through an in-court process expected to begin by Oct. 1. It would slash about $900 million of debt and at least $600 million of other obligations, the company said.
Emerging Consumer Companies
Rent the Runway to close all stores permanently
Subscription clothing company Rent the Runway has decided to permanently shut all of its stores in order to focus its investments on digital and adding more drop boxes where subscribers can drop off clothes to be returned. The brand’s New York City flagship will be turned into a permanent drop-off site, while stores in Chicago, Los Angeles, San Francisco and Washington, D.C. will be shuttered. Rent the Runway has partnered with WeWork, Nordstrom and West Elm for its drop box locations, and plans to expand the network.
Gymshark raises £200 million from General Atlantic, values company at more than £1 billion
Gymshark, the British activewear brand, raised its first round of external funding – £200 million from General Atlantic, which values the nine-year old company at more than £1 billion. Founded by a then 19 year-old student, Ben Francis, out of his parents’ garage, the brand has become a hit with younger gym goers, gaining support from a network of athletes and social media influencers. As a result of the deal, General Atlantic will acquire a 20% stake, Mr. Francis will retain a 70% stake, and management and partners will account for 10%. The company employs 500 and now generates more than £250 million in annual revenue.
Lemon Perfect, enhanced water brand, raises $6.6 million
Lemon Perfect, the Lemon Grove, California better for you water brand, raised $6.6 million, bringing total funding to date to $11.6 million. Investors included Beechwood Capital, R3 Venture Partners, and NBA players Nick Young, Blake Griffin, Kyle Kuzma, and Spencer Dinwiddie. Founded in 2017, Lemon Perfect bring nutrients to cold-pressed lemon water, offering four sugar-free varieties — just lemon, peach raspberry, blueberry açaí, and dragon fruit mango. Products are currently available on Amazon, and in 3,000 stores across the country, including 7-Eleven, CVS, Publix, Target, and Whole Foods.
Grocery & Restaurants
NPC International is preparing for the sale of “all of or a portion of” its Pizza Hut business and the closure of up to 300 restaurants after coming to an agreement with Yum Brands Inc. as part of ongoing bankruptcy proceedings, the company said. The Leawood, Kan.-based franchise operator is the largest Pizza Hut franchisee with 1,227 restaurants in 27 states, representing about 20% of the pizza chain’s system in the U.S. As NPC International begins the sale process, the agreement with Yum Brands will allow the franchise operation to close up to 300 unprofitable Pizza Hut restaurants, or almost 25% of its total Pizza Hut portfolio, most of which are dine-in restaurants. The franchise operator was struggling even before the pandemic. NPC filed bankruptcy in July, blaming the pandemic and “dynamic changes due to shifting consumer preferences and dining behavior,” but also higher labor and commodities costs. NPC International is also a large Wendy’s franchisee and the company operates more than 1,600 restaurant franchise locations in total.
Equity consortium acquires Waterloo Sparkling Water
Flexis Capital, Moore Strategic Ventures, and Eurazeo, through its investment division Eurazeo Brands, have acquired Waterloo Sparkling Water. The Flexis Capital–led equity consortium also includes JW Levin Management Partners and Waterloo Capital’s investors. Founded in 2017, Waterloo Sparkling Water offers a range of fruit-flavoured carbonated waters. The brand’s beverages are reportedly free from calories, sodium, sugar and artificial sweeteners, and are made with Non-GMO Project Verified and Whole 30 Approved flavours. The new capital will be used to grow Waterloo’s business by accelerating product and marketing innovation. Waterloo says that the investment will also provide it with additional operational resources and brand-building expertise.
Diageo to buy Ryan Reynolds-backed Aviation Gin for $610 million
Diageo is paying up to $610 million for Aviation American Gin, co-owned by Hollywood actor Ryan Reynolds, and a clutch of other spirits brands, adding to a gin portfolio that already includes Tanqueray and Gordon’s. Diageo isn’t new to acquiring brands linked to Hollywood celebrities, having in 2017 paid $1 billion to acquire the super-premium tequila brand Casamigos co-founded by “Ocean’s Eleven” star George Clooney. It also teamed up with music producer and rapper Sean “Diddy” Combs to sell Ciroc vodka in 2007. The deal comes at a time when consumption of gin has been rising in the United States. According to the Distilled Spirits Council, distillers sold nearly 10 million nine-liter cases of gin in the United States in 2019, generating $918 million in revenue, a 3% rise over 2018. Most of this growth was driven by the super-premium gin category where bottles cost $25 and upwards.
DoorDash expands with on-demand grocery delivery
DoorDash is announcing that customers can now order groceries through the DoorDash app from partners including Smart & Final, Meijer and Fresh Thyme. Additional stores like Hy-Vee and Gristedes/D’Agnostino are supposed to be added in the next few weeks. Through these partnerships, DoorDash says it has a delivery footprint covering 75 million Americans in markets like the San Francisco Bay Area, Los Angeles, Orange County, Sacramento, San Diego, Chicago, Cincinnati, Milwaukee, Detroit and Indianapolis. DoorDash began delivering from a wide range of convenience stores earlier this year. Fuad Hannon, the company’s head of new verticals, also noted that a number of grocery stores are already part of the DoorDash Drive program, a white-label service where DoorDash handles last-mile delivery. So Hannon said introducing grocery delivery into the DoorDash app itself is a “natural extension” of those efforts. And in contrast to many other grocery services, the company promises to deliver within an hour of your order. “There’s no scheduling, no delivery slots, no day-long waits,” he said.
Home & Road
Libbey outlines plan to emerge from bankruptcy
Libbey has outlined a restructuring plan as part of its efforts to emerge from bankruptcy. The plan, filed with the U.S. Bankruptcy Court for the District of Delaware, outlines its proposal to strengthen its balance sheet, reduce debt and improve liquidity. The glassmaker has received a term sheet from seven of its lenders to provide $150 million in exit financing, which after fees and repayment of the company’s existing debtor-in-possession financing will provide $75 million of incremental funding for future operations, the company said in a statement. Libbey also expects to replace its $100 million DIP revolving credit facility with a new exit facility with approximately $20 million initially drawn. Overall, Libbey said it expects to emerge from the Chapter 11 process with less than $200 million of funded debt, compared to more than $400 million of debt that existed at the beginning of the court-supervised process.
Lowe’s in blow-out quarter with earnings near $3B mark
Lowe’s Companies saw its second-quarter U.S. same-store sales rise 35.1% as consumer spending on home projects continues to surge amid the pandemic. The results came one day after rival Home Depot’s earnings report, which included a 25% comp-store sales gain. Lowe’s net earnings climbed 68.7% to $2.82 billion, with adjusted earnings per share of $3.75, for the quarter ended July 31, up from $1.7 billion, with adjusted earnings of $2.15, in the year-ago period in the prior year quarter. Lowe’s strong earnings performance came as it invested $460 million during the quarter in support of frontline hourly associates, communities and store safety. Additionally, the second quarter performance resulted in a record quarterly “Winning Together” profit-sharing bonus for its hourly associates at 100% of its stores, which totaled $107 million. Revenue rose 30% to $27.3 billion, up from $21.0 billion last year and easily topping Street estimates for $24.27 billion. Online sales soared 135%.
DTC segment jumps from fourth to second place in Top 25 share
The leading 25 furniture and bedding retailers in the nation collectively increased their sales by 6.7% last year, according to a Furniture Today analysis. The growth was largely fueled by dollar gains among traditional furniture stores and online giants Wayfair and Amazon. In total, the top 25 retailers posted $48.8 billion in furniture and bedding sales last year. E-commerce behemoths Wayfair and Amazon combined for $7.5 billion in furniture and bedding sales in 2019, representing a 27.7% annual growth. In dollar terms, together the two giants netted furniture and bedding sales growth of $1.6 billion last year, good enough to catapult from fourth to second place in terms of Top 25 share. Though gaining ground rapidly, No.4 Amazon still trails No.2 Wayfair by an estimated $1.2 billion in furniture and bedding sales.
Jewelry & Luxury
Jewelry Can Capture Market Share from Travel, De Beers Says
Jewelry can capture consumer dollars that would have otherwise been spent on travel and other experiences, De Beers found in its latest “Diamond Insight Flash Report,” part of a series of reports it’s doing on consumer attitudes in the COVID-19 era. In a poll of 500 Americans aged 18 and above, only 15% believe they will spend on travel in the next six months. That could be a benefit for jewelers, since, the report said, “experiences”—particularly travel—have replaced material things as millennials’ top choice of discretionary spending in recent years. It also found that 44% of consumers had more disposable cash due to the cancellation of travel, dining, or other experiences during the year.
Tiffany Providing Info About Where Diamonds Cut, Set
Tiffany & Co., which last year announced it was telling consumers the place and country where most of its diamonds were mined, is now taking that further by telling consumers where its gems are cut and set into jewelry. The program laying out each piece’s “craftsmanship journey” will launch in October, and will apply to all its individually registered diamonds 0.18 carats and up. The company buys 80% of its rough direct from mining companies, and owns jewelry workshops in Belgium, Mauritius, Botswana, Vietnam, Cambodia, and the United States.
Ebay to Authenticate All Watches on Platform Over $2K
Luxury watch collectors have always been wary of shopping for timepieces on eBay. The original online marketplace is a great place to pick up a used bike or even a rare Danish-modern dining room set. But the platform has been challenged by counterfeiters over the years, and without the resources to stop the occasional faux Rolex or Panerai from slipping into its listings. But come fall, that’s changing—at least when it comes to high-end watches. Ebay has slowly been rolling out its new Authenticity Guarantee, a robust post-sale authentication service for all watches sold over $2,000.
Office & Leisure
Toys R Us, Amazon Are Linked Online Again, After E-Commerce Deal with Target Ends
Ten months ago, the resurrected Toys R Us brand made news when it announced an e-commerce partnership with Target. Last month, Toys R Us and Target quietly ended that partnership. Now, toys featured on the Toys R Us website have a click-to-buy link to Amazon. The last time Toys R Us partnered with Amazon for e-commerce it led to a lawsuit, and delays caused by that ill-fated partnership were a key factor in the eventual death of Toys R Us. E-commerce was the Achilles heel of the old Toys R Us. Its digital mistakes – including that spectacularly near-sighted partnership with Amazon in 2000, and a decade of false steps in developing its own e-commerce operation – played a big role in the 2017 bankruptcy and 2018 liquidation of what once was the largest U.S. toy retailer.
Barnes & Noble wants to be a great bookseller again
When U.K. bookseller James Daunt took over as CEO of Barnes & Noble a year ago, after a sale that landed it in private hands, he faced the formidable challenge of rescuing the chain from troubles largely of its own making, in the shadow of Amazon’s prowess in the segment. At the time of the sale, annual revenue at Barnes & Noble hadn’t grown for seven years, declining, in fact, by some $700 million since 2015. As Amazon powered on as a top bookseller, Barnes & Noble cycled through a series of CEOs and strategies. The COVID-19 pandemic has interfered with much of whatever Daunt’s plan may have been. A year ago, new owner Elliott Advisors had said store closures weren’t likely. But in June, the company closed an Upper East Side location in New York City, and laid off an unspecified number of employees in its corporate office.
Technology & Internet
Amazon makes it harder for sellers to avoid its shipping service
Amazon.com plans to make it harder for merchants to ship products themselves, meaning they’ll be more likely to pay the company to handle the task. New shipping performance requirements, announced in an email to merchants Tuesday, will require third-party sellers to make deliveries on Saturdays and meet new one- and two-day delivery pledges starting in February. If the merchants fail to meet the targets, they risk losing a coveted Prime fast-shipping badge that influences which products shoppers buy. Amazon said the changes are necessary because sellers’ deliveries are often late, while merchants say they worry they’ll be forced to pay for Amazon logistics without a chance to shop around. The move has potential antitrust implications because merchants could be forced to raise product prices if using Amazon logistics costs more than paying United Parcel Service Inc., FedEx Corp. or the U.S. Postal Service.
U.S. Postal Service Adds First Surcharges Ahead of Holiday Rush
The U.S. Postal Service is rolling out its first peak-season surcharges for commercial package deliveries as the agency seeks to cope with costs from the coronavirus pandemic and an expected surge in holiday demand. The increases range from 24 cents to $1.50 per package and will last from Oct. 18 to Dec. 27, the post office said Friday in a notice to the Postal Regulatory Commission. The higher prices will affect Amazon.com Inc., smaller retailers and couriers such as United Parcel Service Inc. that rely on the government agency as an inexpensive last-mile delivery option. The post office’s price increases follow similar moves by UPS and FedEx, which added surcharges earlier this year as the pandemic prompted more people to order goods online rather than risk shopping in stores. Package carriers are expected to be strained this holiday season, raising concern over their ability to keep pace.
Finance & Economy
Jobless claims climb back above 1 million as recovery in U.S. labor market slows
Initial weekly jobless benefit claims rose in mid-August and topped 1 million again, potentially pointing to an increase in layoffs after a summer surge in the coronavirus epidemic or perhaps to more people applying for benefits after President Trump temporarily added $300 in extra federal payouts. New applications for unemployment benefits, a rough gauge of layoffs, climbed to 1.11 million from 971,000 in the prior week, the Labor Department said.
Consumer Confidence Still Wavers As Fate Of Second Stimulus Remains Unclear
Americans are feeling a bit more optimistic about their finances, but overall consumer confidence continues to waver nearly six months into the pandemic response. Consumer confidence dropped in several key areas compared to the prior week: purchasing and investing, job security and respondents’ current financial situation. Americans’ confidence in their current financial situation was just 39.6, down two points from the prior week and down almost 14 points since the beginning of the pandemic. The future outlook for personal financial situations and employment increased by about half a point to 63.3.
