Lord & Taylor and the company behind Men’s Wearhouse and Jos. A. Bank filed for bankruptcy protection on Sunday, the latest American retailers to fall victim to the coronavirus outbreak.
The department store chain Lord & Taylor traces its roots to 1826, and had been floundering for years. Tailored Brands, which once dominated the market for men’s suits through Men’s Wearhouse and Jos. A. Bank, saw demand plummet for its corporate clothing with the pandemic keeping America’s office workers at home.
Tailored Brands had approximately 1,400 stores and 18,000 employees. It had already announced plans in July to eliminate 20 percent of its corporate jobs and close up to 500 stores, and on Sunday, the company said that it planned to use the restructuring process to cut its debt by at least $630 million.
Lord & Taylor was acquired last year by the clothing rental start-up Le Tote in an unusual $100 million deal. Now Le Tote and Lord & Taylor are both seeking Chapter 11 protection from their creditors. The companies said in a filing on Sunday that they operated 38 locations, which had been temporarily closed since March.
European markets slowly moved into positive territory on Monday, as investors weighed a mixed bag of business news against continuing concerns about the spread of the coronavirus.
The DAX in Germany, which gained more than 1 percent in morning trading, led European indexes. Asian stocks ended the day mostly higher. Futures on Wall Street predicted a modest uptick when trading starts New York.
In other markets, the price of the U.S. 10-year Treasury note fell. Oil futures fell on the first day of trading since an agreement by major oil producers to restrict production, a result of plummeting prices for crude in April, had expired. Brent crude was down about 0.8 percent to $43 a barrel, and West Texas Intermediate was about 1.1 percent lower at $39.80 a barrel.
U.S. stocks rallied on Friday and the S&P 500 ended July with a gain of more than 5 percent. The index has climbed for four consecutive months — rising more than 26 percent since the end of February. A big factor behind the rally has been the success of big technology companies: Apple gained nearly 10.5 percent on Friday, reaching a record, as the company announced a four-for-one stock split, and shares of Amazon and Facebook also rose.
Concerns about the spread of the virus continued through the weekend, with tightening restrictions in Manila and Melbourne, Australia. In the United States, Dr. Deborah L. Birx, the Trump administration’s coronavirus coordinator, said that the country was in a “new phase” of the pandemic, and that it was much more extensive than the spring outbreaks in major cities like New York and Seattle.
HSBC, the London-based bank with roots in Asia, reported a huge drop in profit as it set aside billions for delinquent loans; its shares fell more than 5 percent. On a positive note, the IHT Purchasing Managers’ Index for manufacturing in the euro area reflected the first expansion in activity since early 2019.
🤝 American lawmakers are haggling over a new stimulus bill, with the shape of supplemental jobless benefits — which expired last week — the biggest sticking point. Democrats are pushing for a $3 trillion package that extends many of the previous measures, while Republicans have aimed for a narrower bill worth around $1 trillion.
🗣 It’s another busy week for earnings, with more than 100 S&P 500 companies reporting their latest quarterly results. The highlights include BP, Diageo, Disney and KKR on Tuesday; CVS and Moderna on Wednesday; Uber on Thursday; and Berkshire Hathaway on Saturday.
📱 Today, Google is expected to unveil its latest Pixel smartphone. On Wednesday, Samsung announces its latest line of phones, tablets and watches. Most of these gadgets will be able to connect to 5G networks, if only more of those were available.
📈 A crucial U.S. jobs report on Friday will reveal whether improvements in hiring in May and June continued in July. Weekly data on unemployment claims haven’t been encouraging, but economists still predict that the economy added around 1.6 million jobs last month (on average, with huge variations in forecasts).
Overcrowding, not density, has defined many coronavirus hot spots. Service workers’ quarters skirting Silicon Valley are no exception. The Times’s Conor Dougherty reports:
It was not surprising when three-quarters of the house tested positive. There were 12 people in three bedrooms, with a bathroom whose door frequently required a knock and a kitchen where dinnertime shifts extended from 5 p.m. well into the evening.
Karla Lorenzo, a Guatemalan immigrant who cleaned houses in San Francisco and Silicon Valley, lived in the big room along the driveway. Big is a relative term when a room has five people in it. She and her partner, Abel, slept in a queen-size bed along the wall. There was a crib for the baby at the foot, with the older children’s bunk bed next to that. The other housemates had similar layouts.
Living among many people, as Ms. Lorenzo put it in Spanish, you cannot really avoid your housemates. The sounds, the smells, the moods — everyone is pressed against all of it, and they understood that if one of them got the coronavirus, the rest probably would.
That happened in April, and now the house is returning to health. Abel, referred to by his first name because his immigration status is uncertain, is home after three weeks in the hospital, where Ms. Lorenzo feared he would die alone gasping for air. And she is no longer squirreled in the closet where she spent days to avoid giving the virus to the children.
Now comes a second struggle: figuring out how to pay rent.
HSBC, Europe’s largest bank, reported a 96 percent drop in profit in the second quarter to $192 million, as the bank increased provisions for bad loans by $3.8 billion. The bank, which does almost half of its business in Asia, also confirmed plans to speed up a restructuring plan that would cut 35,000 jobs.
Marathon Petroleum, the largest U.S. independent refiner, announced Sunday that it had sold its Speedway gas station chain to the Japanese retail group that owns 7-Eleven for $21 billion in cash. The sale of Speedway, one of the country’s largest convenience store chains with nearly 4,000 outlets, is the biggest corporate deal in the oil sector since the coronavirus slashed demand for fuel early this year.
The president of the Federal Reserve Bank of Minneapolis suggested that it would be better for the economy if authorities across the United States reinstated lockdowns to bring the spread of the coronavirus under control.
“We’re going to have flare-ups, lockdowns, and a very halting recovery with many more job losses and many more bankruptcies,” Neel Kashkari said, speaking on CBS’ Face the Nation on Sunday.
“If we were to lock down hard for a month or six weeks, we could get the case count down, so that our testing and our contact tracing was actually enough to control it,” Mr Kashkari said. “If we don’t do that, and we have this raging virus spreading throughout the country with flare-ups and local lockdowns for the next year or two, which is entirely possible, we’re going to see many, many more business bankruptcies.”
“That’s going to be a much slower recovery for all of us,” he said.
He also said that given the low cost the United States government is paying to issue debt, the government has room to spend to support the economy.
“Congress should use this opportunity to support the American people, and the American economy,” he said. “If we get the economy growing, we will be able to pay off the debt.”