97.30 -0.21 (-0.22%)
After hours: 6:19PM EDT
|Bid||97.51 x 1000|
|Ask||97.70 x 1100|
|Day's range||92.13 - 97.82|
|52-week range||70.03 - 130.24|
|Beta (5Y monthly)||0.65|
|PE ratio (TTM)||15.32|
|Earnings date||19 May 2020 - 24 May 2020|
|Forward dividend & yield||2.64 (2.85%)|
|Ex-dividend date||18 May 2020|
|1y target est||123.97|
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(Bloomberg Opinion) -- As fashion retailers shutter their storefronts across Europe and North America due to the coronavirus, some of the world's most vulnerable workers are feeling the pain — and getting shafted.In Bangladesh, garment factories have already furloughed more than 1 million workers thanks to at least $3 billion in canceled and postponed orders. Elsewhere in Southeast Asia, a key hub for apparel production, the toll is multiplying as quickly as the virus is spreading. If left unaddressed, the crisis could endanger the lives and livelihoods of millions more of the region’s workers.For decades, the apparel industry has had something of a devil’s bargain in Southeast Asia. Western companies have accepted the reputational risk that comes with capitalizing on the region’s low-wage labor, while local governments have tolerated poor factory conditions in return for jobs and growth. In some respects, the benefits have been undeniable: Last year, Bangladesh's apparel industry generated $35 billion in revenue, accounting for 80% of all export earnings, and employed 4.4 million people.In 2013, however, the human costs of this bargain became plain when Rana Plaza, a complex of garment factories near Dhaka, collapsed and killed at least 1,132 workers. The retailers and brands that had outsourced their production to the region looked for ways to prevent a recurrence while ensuring that outsourcing — and Bangladesh's most important export — could be sustained.The next year, they hit on a solution: independent monitoring and inspection organizations, empowered for five-year terms, with buy-in from government and local businesses. Over the next few years, these watchdogs inspected thousands of factories, shut down those that were in violation of safety standards, and pushed often expensive improvements — everything from installing fire alarms to improving building foundations — on others.Even under ideal conditions, however, this solution was only provisional. Earlier this month, the U.S. Senate Foreign Relations Committee released a report documenting backsliding on labor rights in Bangladesh and elsewhere. But the disruption caused by the new coronavirus could prove to be a tipping point.So far, it’s come in two waves.The first started in February. China supplies the overwhelming majority of raw materials for Southeast Asia's garment makers (60% in the case of Vietnam). As Chinese textile producers shuttered, manufacturers in neighboring countries seized up. In Cambodia, the government recently predicted that 200 garment factories, employing 160,000 workers, could soon face raw-material shortages. Already, 10,000 Cambodian workers have been laid off, and some factory owners are reportedly taking advantage of the crisis to push out unionized employees. Safety standards will likely follow them out the factory doors.The second wave of trouble is just starting. In recent weeks, companies including Irish retailer Primark Ltd., Britain's Marks & Spencer Group Plc and Minneapolis-based Target Corp. have canceled, postponed or declared force majeure on orders for which their Southeast Asian partners have already purchased raw materials, and in some cases even completed work.The situation is so serious that Cambodia and India have made direct appeals to global brands to avoid cancellations and work out payment plans. Few are responding. According to a survey of Bangladesh’s garment factories conducted in March, nearly half had lost "a big share" of their orders. Nearly all buyers, most of whom are located in Europe, have refused to contribute to wages for furloughed workers.In the short term, such steps might help apparel companies weather a downturn. But the last decade should’ve taught them that — at least in the eyes of their customers — they have a deeper responsibility to the workers who manufacture their merchandise. A 2018 survey of consumers in seven countries found that nearly three-quarters of them believed that clothing companies should be held responsible for what happens in their factories and should transparently disclose working conditions. The danger is that the coronavirus gives factory owners and governments an excuse to roll back expensive safety programs and ignore hard-earned progress on wages and working conditions.There’s no easy fix when pain is being shared across an industry — not to mention across the world. But all parties would benefit if retailers and brands committed to a shared responsibility for paying garment workers for completed work, and contributed to a reasonable severance during the inevitable virus-driven slump. On Monday, Swedish fast-fashion giant H&M announced it would take delivery of goods (including those in production), and pay for them. Other brands should follow suit. Doing so will help long-time manufacturing partners who've improved safety standards and workers’ rights to stay in business through the pandemic.Meanwhile, rich-country governments keen to support labor rights in Southeast Asia should maintain preferential trading policies with the goal of supporting the region's workers through a devastating downturn. That should help some of the world's most vulnerable get through the next few months, while ensuring that years of progress made by the global apparel industry isn't left in tatters.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Adam Minter is a Bloomberg Opinion columnist. He is the author of “Junkyard Planet: Travels in the Billion-Dollar Trash Trade” and the forthcoming "Secondhand: Travels in the New Global Garage Sale."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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(Bloomberg) -- President Donald Trump’s signature has barely dried on the historic $2 trillion stimulus bill and a broad range of U.S. industries are scrambling to get access to much needed cash and other assistance.Industries including retail, hotels, travel and manufacturing are preparing to take advantage of the loans, grants, tax relief and other assistance offered by the legislation. Lawmakers indicated it may not be the last round of stimulus, with the economy and some industries still needing help.The bill includes about $500 billion in loans and assistance for larger companies, as well as states and cities. Separately, it offers about $377 billion in aid for small businesses, much of which would be in loans through the Small Business Administration and banks, guaranteed by the federal government.Here’s a look at how some of the affected industries are viewing the relief package and issues they’re facing:Airlines to get loans and cash for equityAirlines posted their first weekly gain since mid-February after winning tens of billions of dollars in government support in the U.S. stimulus package. The industry is bleeding cash as passenger loads fall to a small fraction of their normal level. A Standard & Poor’s index of major U.S. carriers has lost almost half its value this year.The rescue plan allocates $50 billion in aid for passenger airlines, half in loans and half in cash assistance earmarked exclusively for payroll, benefits, health care and other employee costs. The aid package includes provisions that require airlines to provide the government with equity or other securities in exchange for the money.The bill would also give Transportation Secretary Elaine Chao the authority to require carriers to continue servicing cities that they were flying to as of March 1, creating potential tension as airlines pare service to match demand.In exchange for the grants, airlines must maintain employment levels through through September and are barred from cutting worker pay and benefits. Companies are barred from paying dividends or buying back shares through September 2021, and must cap executive compensation and termination payouts for two years.“Essentially, the U.S. government is providing funds to motivate airlines to continue air service and not furlough any team members through a period of incredibly low demand for air travel,” Doug Parker, chief executive officer of American Airlines Group Inc., said in a message to employees Thursday. “We are confident those funds, along with our relatively high cash position, will allow us to ride through even the worst of potential future scenarios.”A major goal of the government aid is to avoid job cuts, and airlines are rushing to slash other costs. Executives are taking pay cuts, freezing hiring and offering voluntary unpaid leaves to employees. With so few passengers flying, carriers are dramatically curtailing flight schedules.“I can assure you we are losing money on every single flight, and big money,” Southwest CEO Gary Kelly told employees Thursday. “So that can’t be sustained indefinitely.”Boeing analyzes funding and strings attachedBoeing Co. shares fell on Friday for the first time this week as investors puzzled over whether the plane maker would take government aid for itself and suppliers.Nothing is off the table for now, as Boeing analyzes the funding options available, said people familiar with the review, who asked not to be identified as the matter is confidential.Boeing is exploring the terms and conditions that would be attached to the $500 billion in corporate aid to be distributed through the Treasury Department, the people said. The company hasn’t ruled out claiming some of the $17 billion in funding set aside for firms deemed critical for national security, even though it probably would require Boeing to give up an equity stake to the U.S. government.Boeing’s critics had seized on comments by CEO Dave Calhoun to say the company didn’t need government aid. Calhoun told Fox Business the company had “other options” if it were required to give up equity. Treasury Secretary Steve Mnuchin reignited the controversy Friday when he said in an interview on Fox Business he appreciates the fact that Boeing “thinks they can operate on their own.” Mnuchin added, “the government is only there in case they can’t do that.”Shareholders applauded Calhoun’s comments since giving the U.S. government an ownership slice would potentially dilute the value of stock held by other investors. Some contend that the U.S. taxpayers should share the upside if federal funding helps companies like Boeing regain their footing.The Chicago-based company, meanwhile, has a cushion of $15 billion to get it through the summer. But it will need help if the travel-industry tumult lasts longer, said Ken Herbert, an analyst with Canaccord Genuity. The company is burning $3 billion in cash a month and the market for its jets looks “shaky at best,” he said this week in a note to clients.Shuttered restaurants and retailers lobbied hard for helpRestaurants and retail shops are seeing significant revenue losses as states across the country implement shelter-in-place orders, closures of nonessential businesses and encourage social distancing. Trade groups representing those sectors lobbied hard for financial assistance for their industries to be included in the stimulus package.In the past three weeks, restaurants have lost $25 billion in sales, which led to 3 million jobs being lost, according to Sean Kennedy of the National Restaurant Association, which represents thousands of restaurant owners and chains, including McDonald’s Corp. and Chipotle Mexican Grill Inc. He said 3% of operators have “permanently closed their doors and given their keys to the banks” and 11% say they may have to follow suit in the next 30 days.Kennedy said his group is assessing what the bill means for his membership. “This bill goes a long way to allowing us to keep the lights on a little longer, but the future of the industry is going to need continued federal engagement,” he said.With shops shuttered, retailers are also hurting. “Their businesses have come to a halt and it’s not for any fault of their own,” said Austen Jensen of the Retail Industry Leaders Association, which represents Walmart Inc. and Target Corp. among other big-box stores. “These are companies that were operating successfully three weeks ago and now they’ve had to close the doors.”RILA and the National Retail Federation, which also represents smaller shopping establishments, previously called for federal lawmakers to improve retailers’ access to credit since some businesses are struggling to keep their employees, pay their rent or mortgages, and meet other financial obligations.Travel and hotel groups say stimulus heeded calls for reliefThe U.S. Travel Association, which represents transportation, local attraction sites, tourism bureaus and other parts of the industry, hailed the relief package’s loans and grants for small business, tax changes, and money for airports and tourism businesses.“Our industry stayed together and presented hard facts to make the case for massive and urgent relief, and our political leaders heard us,” the group’s president, Roger Dow, said Wednesday.The American Hotel & Lodging Association criticized the cap on small business loans at 250% of monthly payroll, after seeking 400% of monthly operating costs. Association President Chip Rogers urged fixes in coming weeks.Travel restrictions have pummeled the hotel industry, with business trips canceled and vacations on hold as Americans hunker down to stem the spread of the virus. Occupancy rates have dipped to 30% nationally, according to lodging data firm STR, with the numbers even worse in San Francisco, Boston and New York, major cities where the outbreak has hit hard.Marriott, Hilton and Hyatt, which have seen their shares battered in recent weeks, have furloughed or reduced the schedules of corporate workers.Casinos dealing with nationwide shutdownThe casino industry sees the bill’s loan guarantee and tax provisions as “essential to help businesses and employees weather and manage the long-term effects of this crisis,” the American Gaming Association said in a letter to lawmakers.The industry lobbied as hard as any for stimulus funding, sending MGM Resorts International’s then-CEO, Jim Murren, to a White House meeting with Trump on March 17. The industry sought different types of aid, including zero-interest loans.Nearly all of the casinos in the U.S. are closed to prevent the spread of the virus, most after regulators and other local authorities ordered them shuttered. For some operators, the closures also follow a steep drop in Macau, where casinos are now open but largely walled off due to travel restrictions in China.MGM said on Friday it was taking steps to improve its financial situation, including cutting jobs and deferring capital spending. MGM, the largest operator on the Las Vegas Strip, said it had $3.9 billion in cash available and expected to be able to meet its financial obligations for the foreseeable future.Las Vegas Sands Corp. CEO Sheldon Adelson also made calls to support a stimulus package, but told Bloomberg News on Wednesday his company wouldn’t seek any loans. Some observers have suggested that Caesars Entertainment Corp. and Eldorado Resorts Inc., which are pursuing a merger, may be able to double-dip by each seeking aid separately. The companies didn’t respond to requests for comment.Wynn Resorts Ltd. promised to pay workers through the crisis. Executives also took pay cuts, and CEO Matt Maddox said he would get 100% of his compensation in stock. Those moves could help it qualify for loans because the stimulus plan puts restrictions on job cuts and executive pay.The American Gaming Association also lobbied for tribal-owned casinos to be included in the aid package. Native American casinos were much slower to close than those run by non-tribal operators, even in states where closures were ordered, with some citing tribal sovereignty.Theater industry sees bill as lifeline after going darkA trade group for the movie theater industry praised federal relief efforts, saying they would provide a vital lifeline to cinemas that have been forced to close to stem the spread of Covid-19.Patrick Corcoran, a spokesman for the National Association of Theatre Owners, said Thursday the lobbying group is pleased with the provisions it got from lawmakers. He emphasized the industry isn’t pushing to reopen any earlier than health officials suggest, despite being hit hard by the coronavirus pandemic.Small businesses relief program already overwhelmedThe centerpiece of financial relief for small businesses is an unprecedented $350 billion loan program that can convert into grants under certain conditions, including retaining employees.Small businesses, which employ almost half of the U.S. private workforce, have been hard hit by lockdowns across the country and many need fast assistance to stay afloat while their companies are shuttered. But the system set to distribute the funds is already overwhelmed.The government agency that will oversee the program, the Small Business Administration, has been challenged to even maintain a much smaller, existing program, with its website crashing repeatedly under the surging demand.The network of 800 approved lenders expected to divvy up funding have received little guidance so far. It’s unclear, for instance, whether a business owner could apply online or would have to meet with the lender in person.“It’s going to be a herculean lift to get this funding into the hands of affected businesses,” said Reese Howell, CEO of Celtic Bank, a registered SBA lender based in Salt Lake City, Utah.The Small Business Majority, which represents more than 52,000 U.S. firms, said the package doesn’t meet the economic emergency caused by the virus.“We have deep concerns that small business owners will be left to muddle through a cumbersome, slow process that will not get them the cash they desperately need right now,” said John Arensmeyer, the group’s chief executive officer.Banks won relief for community institutionsThe biggest relief for the banking sector in the bill was for community banks, whose capital requirements were cut temporarily to give them more room to lend. The biggest banks already have excess capital they can tap to expand lending by $1.6 trillion, which would increase their balance sheets by 16%.JPMorgan Chase & Co., Bank of America Corp. and the six other banks considered systemically important have suspended share buybacks voluntarily to conserve capital, saying they will use their strength to help companies and consumers dealing with the economic fallout.The industry has gotten more important support and relief from the Federal Reserve and other regulators in recent weeks. The central bank established numerous lending facilities to flood the financial system with liquidity, which eased the banks’ funding needs just as some parts of the market were seizing up.Manufacturers to have access to loans and loan guaranteesCompanies will have access to $850 billion in loans and loan guarantees, according to the National Association of Manufacturers.“These resources will help manufacturers weather this difficult period,” Aric Newhouse, senior vice president of policy and government relations, said in a statement. “This is an evolving situation, but we are committed to working with members of Congress and the administration to aid the speedy delivery of these funds to impacted businesses and develop additional policies to ensure that manufacturing can drive growth when this crisis abates.”Cruise companies excluded due to offshore statusCruise shares tumbled at least 15% Friday after the industry was excluded from the bailout package due to off-shore status. In remarks Thursday, Trump said cruise companies -- which get major tax benefits from incorporating in places such as Panama and Liberia -- should change their homes to the U.S. if they want federal loans. Still, he said he would look for other ways to help them.The trade group Cruise Lines International Association said in a statement it hadn’t lobbied for federal money and said it was grateful for the assistance provided for its vast network of travel agents. Spokeswoman Bari Golin-Blaugrund said the practice of foreign incorporation is common among international maritime industries and that the industry contributes billions in different types of taxes.But the cruise sector’s virtual immunity from U.S. income taxes has been the main sticking point. SunTrust analyst C. Patrick Scholes said Friday that major companies, on average, have six to nine months of cash to get by, including credit lines. He said the industry is hopeful it could get up and running again by the fourth quarter.Scholes said the industry still has other options, including asking governments such as Italy for help -- noting that cruise lines provide jobs by building ships there. But changing registration entirely probably won’t happen, he said.“The business model as we know it wouldn’t survive if they had to pay U.S. wages and benefits,” Scholes said.Uber, Airbnb won extended unemployment benefitsRide-hailing company Uber Technologies Inc. and home-sharing company Airbnb Inc. lobbied Congress to extend unemployment benefits to independent contractors and sole proprietors as part of the bailout bill, in an attempt to provide relief to those who rely on their platforms for income but aren’t traditional employees. Workers such as Uber drivers don’t receive benefits from the companies themselves.The biggest technology companies, such Google’s Alphabet Inc. and social media company Facebook Inc., didn’t need assistance. While advertising revenue is expected to fall, both companies have maintained a strong cash position, and their services are vital with people stuck at home. At a time when many companies are laying people off, Amazon.com Inc. has said it could hire as many as 100,000 full- and part-time workers for warehouse and delivery positions.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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(Bloomberg) -- Target Corp. dumped the full-year sales and profit forecast it gave just three weeks ago even as sales in March have soared, underscoring the difficulty retailers face in navigating the unfolding coronavirus crisis.Citing an “unusually wide range of potential outcomes” for its first-quarter performance and $300 million in additional costs as it scurries to keep shelves stocked, the retailer withdrew its sales, operating profit and earnings-per-share guidance for the first quarter and the full year. It also suspended share buybacks and said it will reduce the number of stores it remodels and opens this year, while giving no update on when testing for Covid-19 will begin in its parking lots.“It’s difficult to provide guidance with any precision in this environment,” Chief Executive Officer Brian Cornell said on a call with reporters. “America is largely out of business. There’s no playbook, and we are writing the script each and every day.”What’s clear is that Target’s sales have risen dramatically as Americans stockpile everything from toilet paper to tequila, pushing sales of household essentials and food and beverages up more than 50% in March so far, Target said Wednesday. But demand for apparel has simultaneously plunged, leaving overall comparable sales, a closely watched retail metric, up more than 20% for the month. Since clothing is more profitable than food, Target said its profit margins could narrow in the quarter ending April 30.“In-store shopping behavior is unprecedented,” said Cornell, adding that the company is installing checkout lane markers to maintain 6 feet of distance between shoppers, and will now clean checkouts after every transaction. Kroger Co., the supermarket chain, has gone even further, adding plexiglass partitions at cash registers.No ReturnsTarget will also stop accepting returns, and stop packing items in reusable bags for fear of transmitting the virus. Shoppers who bring their own reusable shopping bags will have to bag their own goods.Analysts have noted that Target, along with fellow discounters Walmart Inc., Costco Wholesale Corp. and Dollar General Corp., could benefit in the short term as shoppers adjust their buying patterns, keep a close eye on their spending and trade down from, say, steak to chicken.“Consumers are reacting very quickly to the change in economic conditions, even when it comes to purchasing consumables,” Scott Mushkin of R5 Capital said in a research note. “The swiftness of this is somewhat surprising to us and may reflect that more economic hardship is already taking place than is widely understood.”Target fell as much as 3.9% in New York trading Wednesday while the S&P 500 Index gained. The stock has declined more than 20% this year.Meanwhile, Cornell declined to say whether he agreed with President Donald Trump’s desire to reopen the U.S. economy by Easter, saying “I will leave that to the experts.”He also could not say when Target will start offering testing for Covid-19, the disease caused by the coronavirus, in store parking lots, saying only that it was in the early stages. Rival Walmart, in conjunction with Walgreens Boots Alliance, has already opened a few testing sites in the Chicago area. Target’s pharmacies are operated by CVS Health Corp., and Cornell said CVS is “providing the technical expertise” and would work directly with health officials.As for the well-chronicled shortages of toilet paper, Cornell said manufacturers are adding production shifts to meet the unprecedented demand, which retail supply-chain experts have equated to Thanksgiving and Christmas happening every day for weeks, with none of the usual lead times to stock up.Shifting DemandCornell said demand has come in waves for different types of products, starting with everyday cleaning products and then shifting to food and beverages and now items like games, crafts and small kitchen appliances.The volatile environment has left retailers in the dark, prompting Moody’s Investors Service to cut its outlook on the entire sector.“The U.S. retail industry is battening down for an unprecedented mix of woes,” the credit-ratings company said in a report on Tuesday.(Updates with shares and analyst comment beginning in seventh paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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