Volkswagen cars stand at a parking area during the production restart of the plant of the German manufacturer Volkswagen AG (VW) in Zwickau, Germany, Thursday, April 23, 2020. Volkswagen starts with step-by-step resumption of production. The car company are completely converting the plant in Zwickau from 100 percent combustion engine to 100 percent electric. (AP Photo/Jens Meyer)

Outbreak mutates retail; automakers set dates for restarting

April 23, 2020 - 2:39 pm

The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments Thursday related to the global economy, the work place and the spread of the virus.

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ALTERED STATE OF RETAIL: Retail stores are largely closed across the country and most of the people who worked in those shops have been laid off or furloughed. The pandemic has created a new normal in how people shop as well as what they buy.

— Comparable-store sales at Target rose 7% so far this quarter, but less is being bought by customers at it stores. That seeming contradiction is being driven by booming online sales.

Online sales have nearly tripled so far in April, while store sales have declined.

If something is ordered online and either delivered or picked up curbside, Target logs that as a sale for the store from where the goods were delivered, or left out for pick up.

Sales of food and beverages have jumped 20%, while sales of clothes and accessories have tumbled 20%.

— Gap Inc. has stopped paying rent in North America and elsewhere where stores are closed and said Thursday that it may run out of cash to continue without an infusion.

“We will need to take additional actions to both preserve existing liquidity and seek additional sources of liquidity, beyond our currently available cash and credit facilities within the next 12 months,” Gap said in a regulatory filing.

EARNINGS SEASON: The Dow, S&P 500 and Nasdaq are down between 1.5% and 2.6% for the week after a dismal two days of trading, but they're up more than 20% over the past 30 days.

— Hershey sales were helped, and hurt by the outbreak.

Baking supply sales — Hershey syrup, baking chips and cocoa — all jumped about 30% (check your Instagram account if you don't know why). Gum sales have gone in the other direction, with social distancing knocking fresh breath down a few pegs on the priority list. Fewer people are making impulse buys in checkout lines.

Hershey withdrew financial guidance Thursday citing current events.

— Crocs expects a larger decline in revenues in the second quarter, anticipating that a majority of its retail and partner stores may be closed for the whole period. The funky shoe maker said it is comfortable with the cash it has on hand. Crocs has furloughed workers at its retail stores in North America and reduced pay for executives and board members.

— Revenue at Eli Lilly jumped 15% in the first quarter to $5.86 billion. Lilly estimates that it received a boost of about $250 million from customers stocking up on prescriptions due to the COVID-19 pandemic.

— Sales at Unilever are flat as falling sales of ice cream and other foods are offset by soaring sales of cleaning materials.

AIRLINES: Airlines are facing a financial crunch as the virus brings nearly all travel to a halt.

— An airline trade group says the pandemic poses a greater financial risk and job losses than previously believed for carriers in Europe, the Middle East and Africa, and it wants more aid from governments. The International Air Transport Association said travel restrictions could cost European airlines $89 billion this year, up from a March estimate of $76 billion, and Middle Eastern and African airlines $30 billion, up from $23 billion.

— The Indonesian government is suspending all domestic and international passenger until June 1.

MARKETS: The Dow, S&P 500 and Nasdaq are down between 2% and 3% for the week after a dismal two days of trading, but all are up more than 20% over the past 30 days.

— U.S. stocks pushed higher, even after the government said 4.4 million people filed for unemployment benefits last week as layoffs sweep the economy.

RESTART DATES: Automakers in North America and elsewhere are announcing dates to restart factories that have been closed for at least a month due to fears of spreading the coronavirus.

— Toyota says its restart will begin gradually the week of May 4 in the U.S. and Canada. The company is still waiting for word from the Mexican government on when it can restart there.

The company says it plans to give workers masks, gloves, hand sanitizer, and face shields where needed. It will install dividers to keep employees six feet or more apart, and it will take their temperatures before they enter plants.

Toyota has large assembly operations in Kentucky, Texas, Indiana and Mississippi as well as engine and transmission factories in other states. On Wednesday, Volkswagen announced it will restart its Tennessee plant May 3, while Mercedes will reopen in Alabama on Monday. Hyundai will restart in Alabama May 4, the same day BMW plans to restart its South Carolina plant. Nissan plans a mid-May reopening, and Subaru will restart on May 11.

Fiat Chrysler has a May 4 restart date, with Ford and General Motors expected around the same time. All are negotiating with the United Auto Workers union.

Honda is adding a week to its shutdown. The company says it will continue to keep its automobile plants closed through May 8.

Detroit automakers employ about 150,000 factory workers in the U.S., while international manufacturers have about 85,000.

— The car made famous by James Bond will reopen two of its British factories. Aston Martin Lagonda will resume production at the St. Athan plant in south Wales, which employs about 300 people, on May 5. A second Aston Martin factory at Gaydon will reopen at an unspecified date.

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