Retailers are swamped by unsold clothing.
Tens of billions of dollars’ worth of spring and summer clothing are sitting in warehouses and store displays with no customers to buy them.
In most states and cities, “unessential” stores are still closed by government directive; and tens of millions of people are hoarding their money because they have lost their jobs and incomes or fear they will.
Saks Fifth Avenue, Nordstrom, J. Crew, and other national clothiers are offering discounts from 40 to 70 percent on a range of items; The Gap is selling its entire stock at 60 percent off retail prices.
“It’s Black Friday in April,” said Prashant Agrawal at Impact Analytics. Two-thirds of the clothing and accessory items the company tracked were recently selling at Black Friday prices or below.
But even those discounts are not clearing the shelves.
Since 9 March, online sales of clothing and accessories have sagged steadily against 2019’s levels, including a 20 percent drop in the week ending 6 April, reported Rakuten Intelligence, which tracks electronic receipts.
Outlets such as TJ Maxx and Burlington Stores that typically buy other retailers’ unsold inventory are closed, filled with their own stock, or both. Liquidators, which pay pennies on the dollar when retailers are desperate to dump inventory, already are overstocked with items from bankrupt stores.
Stores’ alternative is to warehouse the clothing until next spring and hope for better. But seasonal clothing “is not like wine that gets better with age,” said Manny Chirico, CEO of PVH Corp., which owns the Calvin Klein and Tommy Hilfiger brands. “Your inventory gets worse.”
Faced with no other options, many retailers are giving away their goods.
Delivering Good, a nonprofit that receives retailers’ and manufacturers’ unsold clothes and gives them to poor families, is hearing from companies it hasn’t worked with before and recently was given 1.5 million pieces of women’s clothing.
For the foreseeable future, the retail clothing industry “will be a bloodbath,” said John Kernan, an analyst at Cowen Inc. “There will be old inventory everywhere.”
Hotel Industry: Rooms Are Available
Eight out of every ten U.S. hotel rooms are empty on any given night, and the hotel industry has laid off 70 percent of its workers, according to the American Hotel & Lodging Association.
On average, full-service hotels are employing 14 employees, not the average of 50 on staff before the crisis. Resort hotels, which averaged about 90 employees per location as recently as mid-March, now are averaging five.
The industry is expecting to lose 50 percent of its revenue this year compared to 2019 and already is costing the U.S. economy $2.4 billion a week in lost wages, according to Oxford Economics.
The effect of the pandemic and economic shutdown on the hotel industry is nine times worse than that of the aftermath of the September 11 attacks, the association calculated. The forecasted occupancy rate for 2020 overall is expected to be proportionately lower than during the Great Depression.
“The CARES Act was an important first step… for the hotel industry,” said Chip Rogers, the association’s president, “but we need Congress to make important changes to the program to reflect the current economic reality.”
Lockheed Martin, Defense Contractors Fly Above the Chaos
Lockheed Martin, like other prime defense contractors, has avoided financial damage from the U.S. economic shutdown.
The company posted $1.7 billion in profits for 2020’s first quarter, about the same as a year earlier. Earnings per share edged up to $6.08, compared to $5.99 in 2019. Analysts had predicted $5.80.
Lockheed expects sales of about $64 billion and has trimmed its forecast by only $250 million – about 4 percent – as a result of the virus and economic crisis.
Defense contractors are considered essential businesses and have remained open and working. Only about 1 percent of the U.S. military supply chain has been disrupted, the Pentagon reported.
Prime defense contractors’ shares have recovered virtually all of their value since the market collapsed in March.
TRENDPOST: As he was leaving office, President Eisenhower warned about the growing power of military-industrial complex and its drive to perpetuate and expand itself. That power makes it too easy for politicians to take us to war when the economy needs a boost.
With 26 million unemployed, small businesses shutting down, and schools and hospitals going begging, we should instead be redirecting defense dollars toward human needs at home and end the trend of starting wars abroad.
Coca-Cola Sales Lose Their Fizz
Coca-Cola has reported a 25-percent drop in worldwide sales as a result of the global economic freeze.
About two-thirds of its sales come from people buying fizzy drinks away from home and in restaurants, sports stadiums, movie theaters, and other public gathering places that have been shut down for a month or more.
Two-thirds of Coke’s sales are outside of North America, which offers few better markets under the global shutdown.
The crisis may shift company strategy, at least in the near term, said CEO James Quincey.
As the crisis ebbs, consumers are likely to be conservative and price-conscious, he said. That might mean putting beverages in smaller containers or refillable bottles.
He also expects the company to de-emphasize novel and experimental drinks and concentrate more heavily on its familiar product lines.
Coke has cut its marketing and capital budgets and canceled several projects in development for niche markets.
PUBLISHER’S NOTE: We disagree with Mr. Quincey. This is exactly the time to take new directions, new approaches, new sales strategies and new products because, Mr. Quincey, a whole new world will emerge from today’s economic destruction.
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Vice Media Mulls Layoffs Amid Lingering Financial Woes
Vice Media, the largest “new media” company in the U.S., is considering laying off at least 300 workers, according to a leaked internal planning document.
Both the flagship Vice News and Refinery29, a site focused on women’s issues and interests, face major cuts, the document indicates. The sites are expecting losses in ad sales of 39 and 33 percent, respectively.
The layoffs would save the company about $40 million a year but, with fewer journalists to produce content, could cost about 30 percent of the sites’ traffic, impacting ad revenues.
Vice was struggling before the economic shutdown took hold. It lost about $50 million last year, fell 8 percent short of its $650-million revenue target, and owes a large payment to TPG, a private investment firm, stemming from a 2017 funding deal.
The company is looking closely at its European offices in Germany, the Netherlands, and Spain, which have large staffs but generate modest web traffic.
The loss of ad sales is industry-wide, with Facebook and Google also seeing dramatic reductions.
Buzzfeed, GroupNine Media, and Vox Media also have taken steps slash costs, including cutting staff salaries and making both temporary and permanent layoffs.
Domino’s Delivers, Hershey’s Melts
Stay-at-home mandates have boosted Domino’s pizza sales by 10.7 percent from 23 March through 21 April compared to the same period in 2019.
The boost could be due, in part, to people receiving their federal stimulus payments and also people tiring of their own cooking while locked in at home, said CEO Richard Allison. He also noted that the average order size increased, indicating either a desire for leftovers or eating out of boredom.
Last month, Domino’s announced plans to hire 10,000 workers to handle the extra business.
Chocolate-maker Hershey reported lower sales and profits in the first quarter than were expected. Although grocery store sales were up, sales vanished from the lucrative theater and mall venues.
The company also noted that consumers are tending to buy lower-priced candy as people find themselves under new financial constraints.
After the announcement, Hershey’s stock price slumped 4.5 percent on 23 April.
TREND FORECAST: Over 70 percent of Americans are overweight and some 40 percent are obese. By the numbers, the lockdown will add to a weight build up. And, as per the data detailed in previous Trends Journals, the cost of obesity and overweight are risk factors for a wide range of chronic diseases together accounting for more than $1.5 trillion in healthcare costs and lost productivity, according to a 2018 study from the Milken Institute Center for Public Health.
Moreover, as also reported in the Trends Journal, those suffering from obesity are prime victims of COVID-19. As stated by Belarus President Aleksandr Lukashenko, who cited obesity as an underlying health condition for virus victims, “How can you even live that way… the virus attacks the weak.”
Weight loss and how to build immune systems against further outbreaks of viruses, flus, etc. with Natural Healing remedies and modalities will be big business as a new health craze will be accelerated by the pandemic pandemonium sweeping the planet.
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Retailers are swamped by unsold clothing.