GNC files for Ch. 11 bankruptcy protection, Ugg in demand
The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments Wednesday related to the national and global response, the work place and the spread of the virus.
– U.S. gasoline consumption is more than halfway back to pre-COVID-19 levels, according to the Oil Price Information Service, an IHS Markit company.
Fill-ups at the pump fell 49% from 2019 volumes during the second week of April. The most recent OPIS survey shows that demand was down 22% in the second week of June, compared with the year-ago period.
Gasoline sales have been climbing at an average of 6.4% per week since April, according to OPIS President Fred Rozell.
– Airport ground-services firm Swissport says it may have to cut half its British staff because of the collapse in airline travel caused by the coronavirus pandemic.
The company, which operates baggage handling and check-in services at U.K. airports including Heathrow and Gatwick, said Wednesday that 4,556 jobs may be cut as it faces a loss of 50% of its revenue this year.
– Royal Caribbean Group’s joint venture with Cruises Investment Holding needs to reorganize due to the virus outbreak.
Sailings for the Spanish cruise line, Pullmantur Cruceros, are canceled through Nov. 15, according to a regulatory filing. Guests already booked to sail on Pullmantur will be offered the option to sail on other Royal Caribbean brands, including Royal Caribbean International and Celebrity Cruises.
Royal Caribbean owns 49% of Pullmantur Cruceros, while Cruises Investment owns 51%.
– Health and wellness company GNC Holdings has filed for Chapter 11 bankruptcy protection. It is looking to close at least 800 to 1,200 stores.
The company said in a statement that it’s looking to restructure its balance sheet at the same time it explores finding a potential buyer, with a minimum purchase price of at least $760 million.
GNC and all of its subsidiaries remain open for business.
The company expects to confirm a standalone plan of reorganization or consummate a sale that will allow the business to exit from the bankruptcy process in the fall.
– Furniture company La-Z-Boy has decided to permanently close its Newton, Mississippi manufacturing plant and reduce its global workforce by approximately 10%. The company had previously temporarily close the majority of its manufacturing operations and temporarily furloughed 70% of its employees as it dealt with plant and store closures tied to the pandemic. La-Z-Boy said in a regulatory filing that it has called back about 6,000 workers.
Consolidated sales dropped 19.1% in its fiscal fourth quarter because of the impact of the virus outbreak on the last two months of the period. Same-store sales for the La-Z-Boy Furniture Galleries network fell 35% due to the pandemic and related store closures.
Governments & Central Banks:
– Theaters, cinemas and swimming pools in Belgium will be allowed to reopen next month as the country enters a new phase of its lockdown exit plan.
Starting on July 1, up to 200 people will be allowed in theaters and cinemas, while the maximum capacity at outdoors events will be limited to 400.
GoDaddy anticipates its second-quarter revenue will exceed its prior forecast of $790 million by approximately 1%, citing strong demand in its business, particularly its domains and its websites + marketing offering.
However, the company said it’s facing challenges in U.S. outbound sales, specifically soft customer demand for certain higher-priced, do-it-for-you services such as GoDaddy Social, and reduced effectiveness of outbound calling to customers. Due to these issues and uncertainty tied to COVID-19, GoDaddy said it implemented a restructuring to address the sustainability of its U.S. outbound sales and operations.
The restructuring plan impacts approximately 814 employees, who are either leaving the company, relocating, or transitioning to other roles. GoDaddy expects approximately $15 million in restructuring charges.
Global stock markets turned lower on Wednesday amid fears over surging coronavirus cases in various parts of the world.
Shoppers loyal to the Ugg brand are helping Deckers Outdoor remain resilient during the pandemic, according to Jefferies analyst Janine Stichter.
Even though Ugg retail stores closed due to the outbreak and there’s been closures across most of its wholesale accounts, Stichter says the brand’s customers have actively sought out Ugg products on both its namesake website and through wholesale accounts.
“While Ugg is typically viewed as a fall/winter brand, Ugg’s strong sell-through during COVID helped further legitimize its standing as a year-round brand,” she wrote.