The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments Tuesday related to the national and global response, the work place and the spread of the virus.
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SPENDING:
— With countries starting to loosen lockdown restrictions, many nations are beginning to show spending improvements, according to Visa. Total U.S. payments volume dropped 5% in May from a year earlier. That's a 13 percentage point improvement from April. Debit grew 12% and credit declined 21% year-over-year in the period. That's a 17 percentage point and 9 percentage point improvement over April, respectively.
Visa said in a regulatory filing that the recovery in international markets in which it process the majority of transactions lagged the U.S. in May. Global processed transactions declined 12% last month, a 12 percentage point improvement over April.
BORROWING:
— Interest rates on U.S. new vehicle loans dropped to 4% on average last month, the lowest since 2013 as automakers offered 0% financing to juice sales. The Edmunds.com auto pricing site says the rate was the third-lowest since 2002.
Loan lengths were near record highs in May with an average of 71.4 months, Edmunds reported. Used car rates averaged 8.3%, down from 8.7% a year ago but up more than a point from May of 2015.
RETAILER RESULTS:
— Sales at Lands' End fell 17.3% in the first quarter due to weakening demand caused by the virus outbreak. The retailer has taken several steps to cut costs and improve its financial flexibility, including implementing furloughs and temporarily reducing salaries for executives and corporate staff. Lands' End said it is cutting about 10% of its corporate staff in the second quarter.
For the second quarter, the company anticipates revenue declining in the mid to high single digits compared with a year ago.
— Dick's Sporting Goods swung to a loss in the first quarter and sales declined, but the sporting goods retailer is seeing sales improve as stores reopen. While consolidated same-store sales fell 29.5% in the first quarter, they are only down 4% through the first four weeks of the second quarter.
— Build-A-Bear moved to a loss in its fiscal first quarter, according to preliminary results, with sales falling 45%.
The company is starting to reopen some stores, but says it expects to continue with tight inventory management, preserving cash and a reduced staff as it works its way through the virus outbreak. It anticipates having approximately 35 stores open by the end of this week, with more opening over the coming weeks.
— Sally Beauty Holdings is seeing a strong uptick in sales at reopened stores. The company estimates May's enterprise-wide sales at $262 million, compared with $95 million in April.
Sally Beauty had 37% of its stores open in the U.S. and Canada in early May, but has 84% open as of Tuesday. All furloughed workers in the field and at headquarters in the U.S. and Canada have been recalled by the company, effective on Monday, except for associates working in the limited number of stores that remain closed. Additional associates in Europe and Latin America will return in the company’s fourth quarter.
CENTRAL GOVERNMENTS & BANKS:
France’s government says its recession will be even deeper this year than earlier thought. Finance Minister Bruno Le Maire said on RTL radio Tuesday that the government now forecasts the French economy – one of the world’s largest – will shrink by 11% this year instead of earlier estimates of 8%. That will be France’s worst economic performance since World War II.
— The Czech economy has been on the decline in the first quarter of 2020 amid the pandemic. Figures released from the Czech Statistics Office on Tuesday show that the Czech economy contracted by 3.3% in the first three months of the year compared with the previous three months, and by 2% year-over-year.
It's the biggest decline since 2010, and the economy is expected to contract even more in the second quarter.
MARKETS: U.S. stock indexes closed broadly higher Tuesday, following gains in global markets as investors hope that the gradual lifting of lockdown mandates will put economies on the path to recovery.
UNPAID LEAVE: Starbucks is encouraging employees to take unpaid leave through the end of September. In a letter sent to employees late last month, Starbucks U.S. President Rossann Williams said employees on leave will be able to keep their benefits and may also apply for unemployment aid. The company has reopened 85% of U.S. stores, but hours are limited and dining areas remain closed.
CRUISE LAWSUIT: Sixty passengers have filed a class action lawsuit against Princess Cruise Lines and its parent, Carnival Corp., alleging they weren’t warned about the coronavirus risk before a cruise in February. According to the complaint filed Tuesday in federal court in Los Angeles, the companies knew previous passengers on its Grand Princess cruise ship reported COVID-19 symptoms.
But the company didn’t tell new passengers before they boarded Feb. 21 for a roundtrip cruise from San Francisco to Hawaii, the lawsuit says. It also says the ship didn’t screen passengers before boarding or take precautions for much of the trip. Two of the plaintiffs contracted the coronavirus while on board. Carnival Corp. spokesman Roger Frizzell said the company doesn’t comment on active litigation.