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The number of Americans seeking jobless benefits soared again on Thursday, in the latest sign of how the coronavirus that causes COVID-19 is impacting all sectors of the economy, as companies are forced to furlough and lay off workers.
Initial jobless claims rose another 6.6 million in the first week of April, bringing total job losses in less than a month to 16.8 million. The current pace of job losses suggest the unemployment rate will soon move past 15% and perhaps even exceed 20%, coming close to levels last seen in the 1930s.
“The harsh reality is that the level of initial unemployment insurance claims is unlikely to recede in the coming weeks,” economists Dante DeAntonio and Matt Colyar of Moody’s Analytic said.
The news weighed against some encouraging signs that the curve of the virus is beginning to flatten in the U.S. epicenter, New York state, and new guidelines from the Centers for Disease Control and Prevention to help essential workers who are showing no symptoms get back to work.
New York Gov. Andrew Cuomo said Wednesday the rate of hospitalizations had slowed for several days, although the state suffered its biggest one-day increase in deaths in a 24-hour period. But that’s partly because patients who were put on ventilators weeks ago were now dying.
Dr. Anthony Fauci, the nation’s top infectious disease expert, cautioned against declaring the virus to be vanquished and noted that the positive movement of the curve show that stay-at-home and social distancing measures are working.
President Donald Trump said he expected the U.S. will soon be “over that curve,” although he declined to specify a date for when those measures could be dropped.
Fauci said the White House Task Force formed to handle the pandemic was working to balance public health concerns with the steps needed to get people back to some semblance of normality.
People should probably never shake hands again, he said, and should continue to wash their hands frequently and stay away from work, if they have a temperature, stretching into the fall and beyond.
There was some good news out of Europe with Italy reporting another decline in virus-related deaths on Wednesday compared with the previous day. Spanish Prime Minister Pedro Sanchez told parliament that the latest figures are encouraging, as Reuters reported.
In the U.K., Prime Minister Boris Johnson was continuing to improve in intensive care, as the Guardian reported, and was sitting up and talking. The death toll in the U.K. rose by 765, based on numbers counted in hospitals.
In Asia, Japan reported 551 new cases on Wednesday, its highest one-day tally, while Singapore also posted its largest increase despite lockdown measures that have been in place for weeks. China reported 63 new cases, all but two of which were reported to stem from people returning from overseas.
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There are now 1.5 million cases of COVID-19 globally and 89,915 people have died from it, according to data aggregated by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University. Another 339,775 people have recovered.
The U.S. leads the world in number of cases at 432,554, more than the next three biggest tallies, Spain, Italy and Germany, combined. At least 14,829 Americans have died and another 24,213 have recovered.
Spain has 152,446 cases and 15,238 fatalities, while Italy has 139,422 cases and 17,669 deaths, the most of any country. Germany has 113,296 cases and 2,349 deaths, and France has 83,080 cases and 10,887 deaths. China, where the virus was first reported late last year, now has 82,883 and 3,339 deaths, according to the data, which some have questioned.
Iran, another hot spot, has 66,220 cases and 4,110 deaths.
There is growing concern that religious groups seeking to celebrate the Easter holiday and Passover over the weekend will put themselves at risk of contacting COVID-19 if they gather in large numbers. Most services are planned to be conducted by lone celebrants and then broadcast to worshippers on TV or the internet, but some states are flouting the advice of public health officials.
Florida Gov. Ron DeSantis, for example, has declared religious services conducted in churches, synagogues and houses of worship to be “essential business” and exempt from his stay-at-home order. Kansas Republican leaders similarly overruled an executive order from Gov. Laura Kelly limiting church gatherings to just 10 people.
Elsewhere, the Federal Reserve unveiled a new set of measures to support the economy and provide a promised $2.3 trillion in relief. Fed Chairman Jerome Powell said the central bank is trying to “provide as much relief and stability as we can” during this period where Americans are staying at home to stop the spread of the pandemic.
The cornerstone of the new measures is a $600 billion “Main Street Lending Fund.” The Fed is also creating a facility to purchase up to $500 billion of short-term notes directly from states, counties and cities. It has eased rules on corporate bonds that will allow it to buy debt from junk bond issuers — as long as they were rated investment grade a day before the Fed’s programs were first announced on March 23.
Company announcements on Thursday again showed boards seeking to conserve cash, withdrawing previously issued financial guidance, furloughing workers and cutting executive pay. General Electric Co. GE, +0.52% offered investors a first look at how the virus is impacting its business, and tobacco giant Philip Morris International Inc. PM, +3.88% said it will not terminate any workers during the crisis (except for cause).
Here’s what companies have said about COVID-19 on Thursday:
• Buckle Inc.’s BKE, +6.78% net sales for March fell 50.2% from a year ago to $41.0 million. The apparel, accessories and footwear retailer said sales for the 9-week period ended April 4, or the first two months of the fiscal first quarter, dropped 26.6% to $104.0 million. The FactSet consensus for first-quarter sales of $143.2 million implies a 28.9% decline from a year ago.
• Eventbrite Inc. EB, +17.52%, a ticketing and event management site among the hardest hit by coronavirus, will lay off 45% of its 1,000 to 1,100 workers. Company Chief Executive Julia Hartz made the announcement during a companywide meeting, according to a report from Protocol.
• Cognizant Technology Solutions Corp. CTSH, +6.28% expects to report first-quarter revenue of $4.22 billion to $4.23 billion, which is up 2.7% to 2.9% from a year ago and above the FactSet consensus of $4.18 billion. The business consultant’s sales started to fall in March, as project fulfillment was delayed, particularly in India and the Philippines and client demand was reduced. The company expects its client demand to be further reduced in the second quarter. Cognizant has drawn $1.74 billion of its revolving credit facility, providing it with net cash of $2.2 billion with no significant debt maturities until 2023. The company is providing employees in India and the Philippines at the associate level and below with an additional payment of 25% of their base salaries for April.
• General Electric is expecting first-quarter adjusted earnings per share to be “materially below” guidance of 10 cents a share provided on March 4. The FactSet EPS consensus is 10 cents. The industrial conglomerate expects free cash flow (FCF) to be “near” previously provided guidance of negative $2 billion. Adjusted EPS deteriorated more than FCF because of non-cash and timing items in its aviation, renewable energy and GE Capital businesses. GE withdrew its 2020 financial guidance, citing uncertainty. “With net proceeds of about $20 billion from the BioPharma transaction now in hand, we have more flexibility to de-risk and further strengthen our balance sheet,” said Chief Executive Lawrence Culp.
• John Wiley & Sons Inc. JW.A, -11.38% lowered its fiscal 2020 financial outlook for adjusted profit and revenue. The research and educational materials publisher cut its adjusted earnings-per-share guidance range to $2.15 to $2.30 from $2.45 to $2.55, below the FactSet consensus of $2.50. The revenue guidance was cut to $1.805 billion to $1.825 billion from $1.855 billion to $1.885 billion, below the FactSet consensus of $1.87 billion. Previous free cash flow guidance of $210 million to $230 million was withdrawn. The company is suspending its previously announced $200 million stock repurchase program.
• Microchip Technology Inc. MCHP, +4.30% is cutting costs even while sales rise given the uncertainty and economic volatility resulting from the COVID-19 pandemic. The chip maker expects quarterly revenue to rise 3% sequentially, up from a previous forecast of flat revenue. Analysts surveyed by FactSet had forecast quarterly revenue of $1.29 billion, or a sequential decline of 3.3%. Senior executives will take a 20% salary cut with non-factory employees taking a 10% cut.
• Philip Morris will not terminate any workers during the coronavirus pandemic except for cause and will continue to pay all employees their regular compensation, even if they are unable to fulfill all of their professional duties due to stay-at-home mandates or other issues. The Marlboro cigarette maker said it’s putting any restructuring plans on hold for now and will offer awards to workers who have to be physically present at their jobs, such as those who work in factories, warehouses, in the field of in offices, where local regulations still allow that.
• Starbucks Corp.’s SBUX, +2.05% fiscal second-quarter earnings will be chopped roughly in half from a year ago due to the spread of COVID-19 in China and then the U.S. Starbucks expects adjusted earnings of 28 cents to 32 cents a share for the second quarter, down from 60 cents a share in the second quarter of 2019. “These estimates reflect the impact of lost sales for the period as well as incremental expenses for partner wages and benefits, store operations and other activities related to the COVID-19 outbreak,” the company disclosed. “This includes inventory write-offs, honoring supplier obligations, store safety-related items, asset impairments and preliminary estimates of certain government stimulus program benefits.” Analysts on average expect earnings of 39 cents a share, down from 66 cents a share at the end of 2019, according to FactSet. The company also rescinded its annual guidance.
• Stitch Fix Inc. SFIX, +14.22% is pulling its outlook for the year because of the “increasing uncertainty” arising from the pandemic. Back in March, Stitch Fix forecast a lower-than-expected revenue outlook of $465 million to $475 million for the fiscal third quarter, and $1.81 billion to $1.84 billion for the year. At last check, analysts surveyed by FactSet were looking for third-quarter revenue of $461.8 million, and full-year revenue of $1.81 billion. The company closed two of its distribution centers — one in South San Francisco, Calif., and one in Bethlehem, Penn. — to comply with local public health orders.
• Travelers Companies Inc. TRV, +5.57% will give its U.S. personal auto insurance a 15% credit on their April and May premiums, as part of is new stay-at-home program. The insurer is working with regulators to obtain necessary approvals for the program. Travelers’s announcement comes two days after Allstate Corp.’s decision to credit its auto insurance customers 15% of their premiums in April and May, as part of its shelter-in-place program.
• Ulta Beauty Inc. ULTA, +2.41% intends to furlough its retail workers as of April 19 due to the spread of COVID-19. Chief Executive Mary Dillon will forego her base salary and has personally donated $500,000 to the Ulta Beauty Associate Relief Program, which will assist employees facing personal hardship from the coronavirus. Ulta continues to offer online sales, and is paying workers in its distribution centers an additional $2 an hour. The company plans to donate 450,000 medical-grade gloves from its salons to hospitals nationwide in coordination with the Federal Emergency Management Agency.
• Visteon Corp. VC, +5.09% is cutting jobs at various sites, in addition to cuts announced as part of a restructuring plan in January. The new plan is expected to cost between $11 million to $15 million and is expected to be substantially completed in mid-2021. The auto parts maker is cutting executive pay for four months, including a 40% reduction in the CEO’s salary, the executive committee’s salaries will be reduced by 30%, cash compensation for non-employee directors will be lowered by 30% and all other employee salaries will be cut by 20%. Separately, Visteon is looking to deliver up to 50,000 face shields and other personal protective equipment to doctors and nurses.
• Walt Disney Co.’ DIS, +4.92% paid subscriptions to its Disney+ streaming service soared past 50 million. The service, launched in November, previously was at 28 million but has surged with the closure of schools and shelter in place edicts for millions of people. Disney+ was rolled out in eight Western European countries including the U.K., Ireland, France, Germany, Italy, Spain, Austria, and Switzerland in the past two weeks.
• Yelp Inc. YELP, -5.49% expects to incur $8 million to $10 million in costs related to the termination and furloughing of employees. The company expects $4 million to $5 million in charges related to the termination of about 1,000 employees and another $4 million to $5 million in charges related to support for roughly 1,100 furloughed workers. The company had $491 million of cash, equivalents, and marketable securities as of the end of March and is “exploring additional opportunities to preserve cash, to increase liquidity and to protect its business as well as its financial health.”Chief Executive Jeremy Stoppelman will not receive a base salary during 2020 and will forgo shares related to his 2020 restricted-stock-unit arrangement that were expected to vest during the balance of the year. Yelp’s board also approved a 30% cut to the base salaries of other Yelp executives that will be effective from April 19 until an undecided later date.
