It’s a tale of three worlds right now when discussing the COVID-19 pandemic from a business perspective.
Housed in one world is the absolutely horrific flow of macroeconomic data that continues to rain down on investors globally as businesses bear the brunt of mandatory quarantines. For instance, the U.S. economy shed an astounding 20.5 million jobs in April. The unemployment rate surged to 14.7%.
Most market experts — and even St. Lous Fed President James Bullard — have told Yahoo Finance lately to expect things to get worse before they get better economically.
Meanwhile, inside the other world is the steady stream of bad news from Corporate America. Neiman Marcus and J Crew filed for bankruptcy this month, crumbling under a mountain of debt and next to no demand with stores closed during the health crisis. J.C. Penney is likely to file for bankruptcy shortly and reorganize, sources have told Yahoo Finance.
First quarter earnings calls this month have been dreadful listens — chock full of executives discussing sweeping layoffs, why they have pulled financial guidance and offering insight into steps to raise money to survive through the year.
By and large the stock market has ignored this dour news from companies, with the S&P 500 rallying about 23% from its late March lows. But it’s still depressing from human and business standpoints.
That said, there is a new world starting to emerge (and this one probably explains why the market has rallied hard from the lows) in discussions of COVID-19. That is the early signs of a business recovery from the very worst of the pandemic, likely reflecting states and countries beginning to loosen stay at home restrictions.
Here are several areas where Yahoo Finance has spotted some green shoots in the world of business.
Hotels in China slowly kick into gear
China was the first to self-isolate because of COVID-19 and the first to re-open on a large scale. Market pros continue to point to the country as a leading indicator of what an economic recovery in the U.S. may look like as states reopen. The thesis may not be totally misguided.
“Occupancy levels are up from the worst of the crisis in China,” Hilton CFO Kevin Jacobs said on Yahoo Finance’s The First Trade.
Hilton said it saw 50% average occupancy levels during the recent May Day holiday at its some 150 hotels in China. Construction has also been restarted on Hilton’s new hotels in the country.
Over at Marriott, occupancy levels at its more than 340 hotels in China hit 25% in April, said CEO Arne Sorsenson on an earnings call. That’s up from 10% in February.
Hardly numbers to pop the champagne over, but enough evidence business travel is coming back to life and consumers are not 100% opposed to travel.
The fast food recovery
Fast-food was hammered in March as dine-in eating went away and consumers ate packaged food to save money. But spending on fast-food has started to come back from the depths of hell as restaurants utilize delivery services and people slowly return to work (and the drive-thru on the way home.)
Several chains’ April sales performance stood out to Yahoo Finance:
Wingstop: Domestic same-store sales surged 33.4%
Wendy’s: Global same-restaurant sales down 10% for the week-ended April 26 compared to a 30% drop in the last week of March
Dunkin’ Brands US: Same-store sales down 25% for the week-ended April 25 versus a 35% decline for the end of March and into early April.
“[Sales are] still not at an acceptable level, but you're starting to see those stimulus checks, roll in a few of the markets starting to open up and be little bit looser with getting out and active again. So we're encouraged by some of the green shoots that we're seeing out there,” Dunkin’ Brands CEO David Hoffmann told Yahoo Finance.
People are car shopping
Go figure. With the U.S. unemployment rate on a collision course to reach 20% in May, people appear to be open to searching for a new car or buying one.
New and used retail unit sales fell 19% during the final 10 days of April, improved from a 52% drop during the first 10 days, said AutoNation on its latest earnings release.
That dovetails with comments made lately elsewhere in the auto sector about U.S. and international demand.
“We think it’s very good that we’re seeing the recovery in China that is more like a V recovery, but we’re not counting on that,” GM CEO Mary Barra told analysts on a first quarter earnings call. “As you look at people’s desire to have their own vehicle for transportation, that certainly could play into it across the globe as an opportunity. So I think it’s too soon to tell, but we’re very positive about what we see happening in China. And we’re even seeing some uptick after the low in North America, specifically the United States, that didn’t get as low as it did in China.”
Avis Budget Group CEO Joe Ferraro told analysts on his earnings call that the company had a “very good week” the last week of April.
Baby steps, but steps worth noting.