The daily business briefing: July 9, 2020
1.
Brooks Brothers has filed for bankruptcy protection and announced it would close 50 of its more than 500 stores due to the coronavirus crisis. The company, which was founded in 1818, also said it would halt manufacturing of its clothing in three U.S. factories in August. Brooks Brothers is looking for a buyer and has "secured a $75 million debtor-in-possession loan from WHP Global," The Wall Street Journal reported on Wednesday. A spokesperson said that the company has been "evaluating various strategic options to position the company for future success" and that "during this strategic review, COVID-19 became immensely disruptive and took a toll on our business." Neiman Marcus, J.Crew, and J.C. Penney previously filed for bankruptcy protections during the pandemic. [The Wall Street Journal, CNBC]
2.
Bed Bath & Beyond reported Wednesday that its quarterly sales dropped by nearly 50 percent during the coronavirus crisis. The decline came despite a more than 100 percent jump in online sales in April and May. Bed Bath & Beyond said it would close about 200 stores over the next two years as it tries to return to profitability. At the end of May the company had 1,478 stores, including 955 Bed Bath & Beyond shops. The company also owns the buybuy Baby, Christmas Tree Shops, and Harmon Face Values chains. The company said the closures should save $250 million to $350 million annually. "We saw there were a number of stores dragging us down," Chief Executive Mark Tritton told CNBC in a phone interview. The company's shares fell by more than 8 percent in after-hours trading. [CNBC, USA Today]
3.
United Airlines on Wednesday warned 36,000 employees, almost half its workforce, that they could be furloughed in October as the coronavirus pandemic devastates airlines. The industry's recovery hopes have weakened in recent weeks as spiking coronavirus infections have caused some states to impose new quarantine restrictions on travelers, and airlines say they have to cut costs as travel demand falls. American Airlines has said it might have 20,000 more employees than it needs this fall. United said not everyone receiving notices will be furloughed. The job losses could be reduced if enough workers take buyouts or early retirement by next week's deadline. United said buyouts taken already would result in a $300 million charge in the second quarter. [The Associated Press]
4.
U.S. stock index futures held steady early Thursday after Wednesday's gains lifted the Nasdaq to a new record high. Futures for the Dow Jones Industrial Average and the S&P 500 were flat, while those of the Nasdaq inched higher. The Dow rose by 0.7 percent on Wednesday, while the S&P 500 gained 0.8 percent. The tech-heavy Nasdaq surged by 1.4 percent, boosted by gains of 2.3 percent by Apple and 2.7 percent by Amazon. The surge came despite another record increase in coronavirus cases that fueled concerns about the recovery. On Thursday, investors are awaiting a report expected to show that 1.39 million workers filed initial claims for jobless benefits last week, a slight improvement from the previous week but still far above pre-pandemic levels. [CNBC]
5.
President Trump met with Mexican President Andrés Manuel López Obrador at the White House on Wednesday to celebrate the finalization of the new pact replacing the North American Free Trade Agreement. Trump also noted that the two countries were cooperating on immigration and fighting drug-trafficking as well. "The relationship between the United States and Mexico has never been closer than it is right now," Trump said. "We're taking this relationship to new heights." López Obrador showed up after an intense debate in his country over whether he should meet with Trump. He promised to represent Mexicans "with dignity," but critics said López Obrador's record of caving to Trump's demands on immigration crackdowns and trade would make the trip humiliating for Mexico. [Bloomberg, The New York Times]