The first clinics, which are rolling out as a pilot program, will be located in the Dallas-Fort Worth area, Phoenix, Louisville, Detroit and San Bernardino, California. Amazon expects to open 20 health centers across those five cities and, if the pilot is successful, it will establish additional centers in other cities and states in 2021, the company said.
While the clinics will serve Amazon employees, they’ll be operated and staffed by Crossover Health, a start-up that works with self-insured employers to provide health care services. The health centers will be located near Amazon’s fulfillment centers, sort centers and delivery stations. With Amazon warehouses open around the clock, the centers will also have extended hours to “accommodate various employee work schedules.”
Darcie Henry, Amazon’s vice president of human resources, said the clinics are designed to provide a range of preventative care resources for warehouse workers, in the place of emergency or urgent care options, which are not only more expensive for patients but also limited in the types of care they can provide.
“We want to solve that for our employees, and the launch of these new neighborhood health centers will provide a range of quality primary care services for employees across the country,” Henry said.
The clinics will offer acute, chronic and preventative primary care, prescription medications, vaccinations, behavioral health services, physical therapy and chiropractic care, among other services.
The clinics are launching at a crucial time, as coronavirus outbreaks continue to pop up across the country. Many warehouse employees have pushed Amazon to protect them better from the virus while they’re on the job. Amazon facilities across the U.S. continue to report new cases and at least nine workers have died from Covid-19.
Amazon has added to its suite of benefits for warehouse employees in recent months. In June, Amazon said it would start providing 10 days of subsidized emergency backup child or adult care for all of its U.S. employees until Oct. 2.
Last September, Amazon launched a virtual health clinic with in-home follow-ups for employees in Seattle, referred to as Amazon Care. In May, Amazon expanded the service beyond Seattle-area corporate employees to warehouse workers near the company’s headquarters. Using an app, employees can connect with medical professionals for a video consultation and then request an in-home visit if necessary.
An employee looks for items in one of the corridors at an Amazon warehouse.
Carlos Jasso | Reuters
Amazon is putting in place new inventory restrictions at its warehouses to prepare for the upcoming holiday shopping rush.
In a note to sellers on Monday, the company said it’s instituting stricter quantity limits for all third-party merchants that store goods in its U.S. warehouses.
All product categories are impacted by the change, with quantities differing on a product-by-product basis. The new policy, which was first reported by CNET, takes effect today.
“Given the unprecedented challenges the Covid-19 pandemic has placed on all of us, we are preparing early to deliver a great holiday season for our customers and selling partners — building out capacity as quickly as we can so we can deliver products customers need and want directly to their doorsteps and help you continue to grow your business,” the note states.
An Amazon spokesperson told CNBC that the quantity limits will “help ensure all sellers using Fulfillment by Amazon have space for their products.” FBA is Amazon’s program that lets individual sellers ship their products to an Amazon warehouse, and Amazon ships the product to customers for a cut of each sale.
Even with the new limits, most products will have enough space available for over three months of sales. If merchants sell all of their stock, they can send in new inventory any time, Amazon said.
Amazon is also waiving inventory removal fees at its warehouses starting July 14, the note states. Amazon typically charges sellers a storage fee for products that aren’t selling in its warehouses. By waiving the fee, it will allow sellers to more easily remove stagnant inventory and free up space at FBA facilities.
The changes show how Amazon is preparing for this year’s holiday shopping season, which is likely to be more challenging than before given the Covid-19 pandemic.
Between March and May, Amazon weathered a series of supply chain constraints and delivery delays at its warehouses as a result of a surge in online shopping orders. The company prioritized shipments of essential goods to make sure shoppers could access in-demand items like hand sanitizer and toilet paper.
Since then, delivery speeds have largely returned to normal, but as Covid-19 outbreaks continue to pop up in some parts of the U.S., Amazon has taken steps to prepare for the possibility of new demand constraints, including pushing back its annual Prime Day shopping event. Prime Day is now expected to take place in the fall, with a target of the first week of October.
‘Shark Tank’ star Daymond John on the pivot to the experience model: ‘Retail is changing by the day’
Retail is going through what can be considered a “golden age” as businesses adapt to a new landscape of connecting with consumers, “Shark Tank” star and serial entrepreneur Daymond John said Friday.
Companies such as Home Depot are using the internet to their advantage to thrive, while others that lack the necessary technology are dying, the FUBU clothing line founder and CEO told CNBC.
“Retail is changing by the day,” he said of successful retailers in a “Closing Bell” interview. “[Retailers] are either dying or they’re striving,” and successful retailers are “just finding a new way to get to their new consumer online.”
The necessity for experiential shopping, he said, can be illustrated by the surging stock prices of online-based commerce firms Amazon and Shopify, the latter of whose stock price recently climbed into the four-digit club.
Shares of Amazon, the e-retail conglomerate, are up more than 73% year to date and closed Friday’s session at a fresh high of $3,200. Shares of Shopify, which outfits businesses with e-commerce tools, are up nearly 160% in that same period, closing the session at 1,031.86, which is within $30 of its peak trade earlier this month.
The comments come amid a wave of retail bankruptcies during a coronavirus pandemic response that had left store operations limited or closed and consumers locked down at home for months. Some of the most noteworthy bankruptcy protections in retail came from Nieman Marcus, J.C. Penney, Pier 1 Imports and J. Crew, among others.
“They’re going to close, they’re going to have smaller imprints, and they’re going to have to change around their model,” John said of companies looking to survive the tech-driven disruption. “Their model is going to need to be more of an experience.”
The experiential retail model involves more than marketing products and customers buying goods. Traditional retailing is all about acquiring new shoppers, upselling current consumers and making recurrent customers buy more frequently, John said.
Home Depot pivoted to the new retail environment starting in 2018 by investing $11 billion into its technology infrastructure to fend off brick-and-mortar competition from Lowe’s and establish a web presence to stave off others such as Amazon.
The goal is to find customers online, John said, explaining how a company such as Sephora must train salespeople to track a customer’s buying habits and consult them on future purchases. He contrasted it to FUBU’s heyday, when the product was simply shipped to a department store, such as Macy’s, and the apparel company was unable to document their customers’ interests.
“If your salespeople now are not in the transactional mode of making a quick sale, and they’re in the mode of making a content and a conversion play and following you home and knowing your buying habits, you’re going to be in good shape,” John said. “But if you’re only thinking of your store as a place of transactions, you’re not going to be in good shape.”
Disclosure: CNBC owns the exclusive off-network cable rights to ″Shark Tank,” on which Daymond John is a co-host.
Marc Benioff, CEO, Salesforce.com speaking at the World Economic Forum in Davos, Switzerland, Jan. 23, 2020.
Adam Galasia | CNBC
So far this month Salesforce, whose cloud software helps corporate salespeople stay on top of their leads, is managing to stay more valuable than one of its longstanding competitors, Oracle. Salesforce’s market capitalization now stands at $180 billion, compared with $174 billion for Oracle. So far this year Salesforce shares have increased 23%, while Oracle’s have risen 9%.
The development comes after Salesforce built greater and greater control of its original market, diversified and saw its internet-delivered software model validated by dozen of other companies, including Salesforce itself.
There’s also a lot of history between the companies. Marc Benioff, the co-founder and CEO of Salesforce, once worked for Larry Ellison, Oracle’s co-founder, chairman and chief technology officer. Benioff has called Ellison his mentor. Ellison invested $2 million in Salesforce and became its inaugural board member. The two men had a falling-out as Oracle began challenging Salesforce, and for years they have belittled each other’s companies.
“I honestly don’t see Oracle as a competitor,” Benioff was quoted as saying in 2010. Now his company is bigger than Oracle. An Oracle spokesperson declined to comment.
Salesforce, once derided as a company that favored growth over consistent profits, has grown up. It’s been profitable for 10 of the 12 most recent quarters, and acquisitions have helped the company become less reliant on its premier Sales Cloud product.
Almost all of Salesforce’s revenue comes from subscriptions and support. In the company’s most recent quarter, the largest proportion of that subscriptions and support revenue was in the “Platform and Other” category, which includes contributions from integration software MuleSoft and charting tool Tableau, which were acquired in 2018 and 2019, respectively. Platform and Other delivered 30% of subscription and support revenue, compared with 15% five years ago.
Even before those acquisitions, Benioff declared victory over Oracle in 2017 in a race to achieve $10 billion in cloud revenue.
Salesforce has expanded its business in part by concentrating more on individual industries. And some credit for that goes to Keith Block, a former Oracle executive whom Salesforce hired in 2013 and elevated to co-CEO alongside Benioff in 2018.
The industry effort, touching on products like the Financial Services Cloud and Health Cloud, is “an unbelievable business,” Benioff said on a 2018 conference call.
“I was excited to see in the quarter and for the seventh time in a row, IDC has ranked Salesforce as the number one CRM,” he told analysts on the company’s quarterly earnings call in May. In the quarter Salesforce’s revenue had grown 30% year over year; in Oracle’s most recent quarter, revenue was down 6%.
Ellison remains about eight times richer than Benioff, according to estimates from Bloomberg. In a meeting with analysts in 2015 Ellison said that he missed the cloud. Moments later, he suggested that an early cloud company was his idea.
I believed in this running things on the Internet, renting services, for a very long time. In fact, I think the first cloud company was called NetSuite. I still own a majority of NetSuite. And creating NetSuite was kind of my idea. It was my idea to build ERP [enterprise resource planning] for small business in the cloud. And the next company that came out was Salesforce.com. They came about nine months after NetSuite. And I was a large investor in Salesforce.com and very supportive of that. In fact, Salesforce.com, if you will, was a copy of NetSuite in the sense NetSuite said, okay, were going to put ERP in the cloud and that was Evan Goldberg. And then Marc Benioff said, hey, that’s a cool idea. I’m going to put CRM in the cloud. It wasn’t called the cloud; it was called SaaS [software as a service]. And they happened about nine months apart.
In the past decade Oracle has sought to become more cloud-oriented, both by building its own cloud infrastructure to challenge Amazon and by buying companies like NetSuite. Salesforce has nevertheless remained the more obvious cloud company between the two.
Other cloud stocks, like DocuSign and Zoom, have outperformed Salesforce this year, with demand flowing to services that enable people to work productively while staying at home during the coronavirus pandemic. The WisdomTree Cloud Computing Fund, an exchange-traded fund based on Bessemer Venture Partners’ Nasdaq Emerging Cloud Index, is up 67% for the year.
So while Salesforce is still growing, some younger and smaller cloud companies are growing faster.
As it surpasses Oracle, some investors would like to see more from Salesforce in the way of profit. Evercore analysts led by Kirk Materne explained the situation in a note to clients on June 23:
As CRM continues to scale and its organic growth rate normalizes into the high teens, the company’s ability to attract new investors that are more focused on cash flow generation has been marred by some of the recent acquisitions, as well as what is perceived as a “lukewarm” commitment to driving operating leverage. This has led to CRM being “trapped” between two investment camps as it’s not growing fast enough to attract momentum investors that are focused on earlier stage SaaS “category killers,” and it’s not profitable enough to attract more GARP-y [growth at a reasonable price] investors who have outperformed by owning software leaders, such as Adobe and Microsoft.
The analysts, who have the equivalent of a buy rating on Salesforce stock, came up with a few places where Salesforce can cut costs, including advertising and events. Raising its operating margin could lift Salesforce stock further, they argued, and that could put further distance between the company and Oracle.
“Delivering slightly higher organic margin expansion and cash flow could help drive a re-rate in the share price and a higher share price HELPS CRM’s long-term GROWTH ambitions as it provides more optionality around M&A,” they wrote.
Rivian R1T electric truck
Electric vehicle startup Rivian on Friday said it closed a $2.5 billion investment round led by funds and accounts advised by T. Rowe Price Associates as the company moves closer to production of an all-electric pickup and SUV.
Other participants in the round included Soros Fund Management, Coatue, Fidelity Management and Research Company as well as Baron Capital Group. Existing shareholders Amazon and funds managed by BlackRock also participated.
The funding comes as the company continues to renovate a former Mitsubishi plant in Normal, Illinoisto produce its vehicles as well as a line of EV vans, which Amazon pre-ordered 100,000 of last year for its delivery fleet.
In June, CNBC obtained correspondence regarding a funding round for Rivian, saying the company was raising at least $2 billion with a pre-money valuation at or above $8 billion. At the time, Rivian denied they were raising money.
“We often receive unsolicited investment offers from institutions and individual investors,” Amy Mast, public relations director at Rivian, said in a June 9 email. “We have heard this rumor ourselves – it is categorically false. Publishing this would be spreading a rumor that is simply not true.”
Mast declined to comment on her remarks Friday.
More recently, CEO and founder Robert “R.J.” Scaringe told CNBC the company was “open” to additional financing to help support its “aggressive growth plans.”
The would-be Tesla competitor raised $2.85 billion last year from Amazon, Cox Automotive, T. Rowe Price Associates and Ford Motor, among others. Rivian raised $1.3 billion in December, its most recent funding round and biggest capital raise last year.
Despite the coronavirus and ongoing recession, investors have shown high interest in electric automakers. Shares of Nikola Motor, which plans to make electric trucks, surged last month after going public through a reverse merger last month. Its market valuation is in-line with Ford, even though it doesn’t expect to generate revenue until 2021.
Rivian is expected to be among the first, if not the first, to bring an all-electric pickup to market early to mid- next year – potentially years ahead of its competitors, including Nikola, Tesla and General Motors.
Rivian is taking pre-orders for its all-electric pickup and SUV that include $1,000 refundable deposits.
Rivian, like Tesla, plans to sell its vehicles directly to consumers, bypassing franchised dealers that are used by “traditional” automakers such as GM and Ford.
A peacock is pictured outside NBC headquarters at Rockefeller Center in New York, January 16, 2020.
Carlo Allegri | Reuters
Without a deal, Roku and Amazon Fire TV users won’t have access to Peacock’s content, which includes TV shows such as “30 Rock,” “Saturday Night Live” and “Friday Night Lights” and movies such as “Jurassic Park” and “Reservoir Dogs.”
Peacock continues to negotiate with both Amazon and Roku, said the people, who asked not to be named because the discussions are private. One person familiar with the talks described the likelihood of reaching an agreement with either party by July 15 as “less than 10 percent.”
The issues under negotiation present a window into what’s important to media and technology companies as they build an infrastructure for the next generation of television. While programmers and pay-TV distributors — cable, telecom and satellite TV companies — have successfully negotiated carriage deals for decades, subscription video services are striking their first deals with digital video aggregators, such as Apple, Amazon and Roku.
Both providers and content companies want to ensure they’re building viable business models, especially as Wall Street judges overall corporate performance on the success of their streaming video initiatives. These deals, which typically cover multiple years, will be the backbone for streamers to reach profitability in the coming years.
Roku and Amazon Fire TV, the two largest connected TV platforms, make up about 70% of the connected TV market, according to eMarketer. There are about 400 million Internet-connected TV devices in U.S., and about 80% of U.S. TV households have at least one Internet-connected TV device, according to a June report from Leichtman Research Group.
Both Roku and Amazon have also failed to strike a pact with AT&T‘s HBO Max, which launched May 27.
Spokespeople for Roku, Amazon, HBO Max and NBCUniversal (which is the parent company of CNBC) declined to comment.
Control over user data
Peacock and HBO Max are wrestling with Amazon on issues regarding who controls user information.
NBCUniversal executives don’t want Peacock to be included within Amazon Channels, Amazon’s store for video app purchasing, two of the people said. While some streaming apps, such as CBS All Access and Starz, can be purchased through Channels, others, including Disney+, cannot. Amazon takes a percentage of revenue for each customer that subscribes through the store.
Both AT&T and Comcast, which owns NBCUniversal, are pushing back on Amazon because of its deal with Disney, which was struck in November, according to people familiar with the matter. Disney’s deal with Amazon allowed Disney+ — a new streaming service at the time — to appear on all Amazon Fire TV devices while keeping it out of the Amazon Channels store. That decision forced customers to sign up and watch all programs directly through Disney+, giving the entertainment company a direct, one-to-one relationship with its customers.
Like Disney, NBCU wants all users to sign up and watch through the Peacock application or website. That would give NBCUniversal valuable credit card information and first-party user data, including information about the shows and movies that users watch. This data can then be used for targeted advertising, allowing Peacock to charge advertisers higher rates. The downside for NBCUniversal is that Channels distribution can help broaden reach and awareness for Peacock.
HBO Max is willing to be included in Amazon Channels (HBO’s solo app already is), according to a person familiar with the matter. But it doesn’t want Amazon to let users watch its shows from directly within Amazon Prime Video, the person said. Instead, WarnerMedia executives want users to be kicked into the HBO Max application. This would give HBO Max more control over the user experience — for instance, the company could recommend other HBO content while users are watching a show — as well as data that can be used to target ads. HBO is planning on launching an ad-supported product in 2021.
“We remain committed to making HBO Max available on every platform possible to as many viewers as possible so they can enjoy beloved shows from HBO, favorites from the Warner Bros. movie and TV library and a diversity of hit programming exclusive to HBO Max,” a WarnerMedia spokesman said in a statement. “We look forward to reaching agreements with the few outstanding distribution partners left, including with Amazon and on par with how they provide customers access to Netflix, Disney+ and Hulu on Fire devices.”
Ad inventory sharing
Peacock’s sticking points with Roku revolve around the sharing of advertising inventory, according to people familiar with the matter.
For years, Roku has been building an advertising business by taking a slice of advertising inventory from each of the streaming applications it distributes on its platform. Roku’s standard is to take 30% of available ad inventory to sell itself, one of the people said. Roku also takes a standard 20% cut of apps bought through Roku Channels and any pay-per-view video.
Roku’s carriage agreements vary depending on popularity and advertising availability. For applications that will likely entice tens of millions of users, the percentage cut on ad inventory is often lower than 30%, according to people familiar with the matter. Negotiations with Peacock have centered around a number closer to 15%, one of the people said. NBCUniversal has estimated Peacock will have up to 35 million users by 2024.
Still, Peacock’s ad sales staff wants to keep as much inventory as possible for itself. One possible remedy under consideration is to give Roku additional inventory for NBCUniversal’s older, existing TV Everywhere application, two of the people said. NBCUniversal may also be willing to give Roku access to certain less-popular content while keeping ad inventory for more popular shows and movies, the people said.
NBCUniversal estimates Peacock will generate average revenue per user (ARPU) per month of $6 to $7. This is an aggregate total for NBCUniversal’s three tiers of Peacock — the free tier that will make money solely from advertising, a $4.99 per month tier that will have a more robust content offering but still include some ads, and a $9.99 tier with no advertising.
NBCUniversal Chairman Steve Burke said last year Peacock will air between three and five minutes of ads per hour of programming, and NBCUniversal expects to make $5 per month from every user on the service from advertising, he said. NBC’s research showed subscribers prefer free services with low ad load, Burke said.
But that $5 per user number could be in jeopardy if NBC gives away its inventory to platforms. Amazon also wants a cut of advertising inventory, one of the people said.
Legacy media companies such as NBCUniversal and WarnerMedia can present difficult negotiations for Roku because they’re used to a fixed amount of advertising inventory in a TV world, one of the people said. In linear TV, with only so much advertising time available, any losses in advertising can’t be made up. Roku has argued to both companies that streaming video is fundamentally different — there are an infinite number of shows available at any time, each which can contain targeted ads, and its audiences are generally growing while linear TV audiences are shrinking. As more people sign up for Peacock or HBO Max on Roku, advertising opportunities will grow in tandem.
There’s also a technology issue at play. NBCUniversal is hesitant about connecting Peacock with third-party ad tech software it can’t control, according to people familiar with the matter. Both NBCUniversal and Warner own proprietary advertising technology.
A game of leverage
Ultimately, both sides will benefit from reaching an agreement. Roku and Amazon will get revenue from including more applications with a broader choice of shows, and HBO Max and Peacock will get broader distribution. But the timing may come down to which party has more leverage.
Both NBCUniversal and WarnerMedia are reluctant to rush into distribution deals when coronavirus quarantines have shut down production of new programming, potentially diminishing immediate consumer demand. Limited original programming slates may cause many users to delay signing up for both services until Hollywood opens again. Peacock will also get a boost in 2021 when it gets exclusive rights to “The Office,” one of the most popular shows on Netflix. NBCUniversal and HBO Max may also feel support from each other in holding out for better deal terms.
Then again, waiting too long may allow millions of potential viewers to become comfortable with other streaming options, which could lead to habits that don’t include HBO Max and Peacock.
Ultimately, at least Roku has said it expects to get a deal done with Peacock.
“We’re an essential partner for any streaming services trying to build a national audience in United States,” Roku CEO Anthony Wood said in February. “So, I think it would be natural to assume that there will be some sort of deal down there.”
Disclosure: Comcast owns NBCUniversal, which is the parent company of both Peacock and CNBC.
Futures contracts tied to the major U.S. stock indexes rose at the start of the overnight session Wednesday evening just hours after the Nasdaq Composite clinched its 25th record close for 2020.
Dow Jones Industrial Average futures climbed 50 points at the start of the overnight session, implying an opening gain of 0.3% when regular trading resumes on Thursday. S&P 500 and Nasdaq-100 futures pointed to similar opening climbs of 0.3% each.
The after-hours moves Wednesday evening followed a positive regular session on Wednesday, with the major indexes brushing off a record daily increase in new U.S. Covid-19 cases. Big Tech continued to carry the broader market higher on during regular trading and again allowed the Nasdaq Composite to outpace the S&P 500 and Dow industrials.
Since last week’s close, the S&P 500, Dow and Nasdaq Composite are up 1.28%, 0.93% and 2.79%, respectively. The Nasdaq is up 29.68% over the last three months.
The latest iteration of the Labor Department report on weekly jobless claims will be released Thursday morning.
The weekly figures provide Wall Street with critical insight on how many Americans continue to collect unemployment benefits, known as continuing claims.
Another 1.39 million workers are expected to have filed first-time claims for state unemployment benefits during the week ended July 4. That would mark a deceleration from the prior week, though still well above any reading prior to the pre-Covid era.
Last week, the government said initial jobless claims rose by 1.427 million in the final week of June. That marked the 15th straight week in which initial claims remained above 1 million.
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Our work-from-home ETF could have staying power beyond the pandemic, Direxion’s head of product says
Work-from-home stocks are working.
The Direxion Work From Home ETF (WFH) has been attracting investors since its June 25 launch, a testament to the rising interest in offerings based on the new normal brought about by the coronavirus pandemic.
David Mazza, head of product at Direxion, told CNBC’s “ETF Edge” on Monday that WFH has seen “a significant increase in assets and trading volume as investors begin to embrace the fact that it’s not just about stay-at-home trades or work-from-home trades.”
The fund has climbed more than 5% since its launch. Its top 10 holdings are as follows:
“This is a long-term theme that’s beginning to play out in the market, and by that I mean societal acceptance of having greater remote work and the ability to work from anywhere,” Mazza said. “The names … in this portfolio cover four technological pillars that are driving the ability for people to work from home.”
- The first pillar is cloud technology, represented in Direxion’s fund by tech giants Microsoft and Amazon, which both have growing cloud-computing businesses, Mazza said.
- The second pillar is cybersecurity, which folds in stocks such as Fortinet and Okta.
- The third pillar is “project and document management,” Mazza said, citing holdings such as Box and Dropbox.
- The fourth and possibly most relevant pillar is remote communications, which accounts for high-profile holdings such as Zoom Video, but also lesser-known names including 8×8 and Twilio, Mazza said. He added that Twilio is helping facilitate New York City’s Covid-19 contact-tracing initiative.
“Many of these might not displace a Microsoft or displace an Amazon just because of their influence and pervasiveness across so many pillars that we use as consumers,” Mazza acknowledged. “But I think the broader point is that when we begin to think about what are the themes that are going to have legs in the new normal, to me, one of those is all the potential … to empower us to be productive, to be efficient, whether that’s working partially in an office, collaborating with people that are socially distanced from us there or collaborating where some of us are in the office, some of us are at our homes or some of us may be other places.”
Tom Lydon, the CEO of ETF Trends and ETF Database, said in the same interview that investing in stay-at-home stocks is “definitely not a fad.”
“Everybody in America and around the world is embracing technology, and stocks are benefiting from that,” he said. “Some of these stocks you maybe have never heard before, but the ETF companies like Direxion do a great job in talking about the underlying stocks and, really, why they might be different from other holdings that you have in your portfolio.”
Lydon called attention to the market’s near-obsession with the FAANG names, the longtime acronym for the stocks of Facebook, Amazon, Apple, Netflix and Google parent Alphabet. Along with Microsoft, the six are heavily represented across indexes and ETFs given their massive market caps.
“The question is: What are the future FAANG stocks going to be?” Lydon said, adding that the equal-weighted S&P 500 is now down more than 12% year to date, a sign that big-cap names are responsible for the broader index staying afloat in 2020. The S&P 500, which is market cap-weighted, is down nearly 3% for the year.
“It’s been those big stocks that have kind of carried the day, but there are also other stocks that are growing that haven’t yet made it into those indexes,” Lydon said. “So, we have opportunities with these new creative ETFs that are out there.”
WFH climbed 1% on Wednesday. In mid-June, BlackRock filed for its own thematic ETF called the iShares Virtual Work and Life Multisector ETF, though it has not yet disclosed any holdings.
Storied apparel brand Brooks Brothers files for bankruptcy, as it seeks a buyer and closes dozens of stores
The coronavirus pandemic has now claimed one of the country’s oldest and most prestigious retailers.
Brooks Brothers — pioneer of the polo and uniform of the polished prepster — filed for bankruptcy on Wednesday, as it continues to search for a buyer.
The retailer, which is more than two centuries old, boasts of having dressed 40 U.S. presidents and countless investment bankers. Early to the office-casual look, it became known for its crisp oxfords and jaunty sports jackets. But rent had become a burden, and the pandemic torpedoed a sale process that began in 2019.
“Over the past year, Brooks Brothers’ board, leadership team, and financial and legal advisors have been evaluating various strategic options to position the company for future success, including a potential sale of the business,” a spokesperson for the retailer said.
“During this strategic review, Covid-19 became immensely disruptive and took a toll on our business.”
The brand has attracted significant interest from potential acquirers, CNBC has reported, but many have preferred to buy the brand with fewer stores.
It began to evaluate which of its roughly 250 North American stores to close in early April. It has already decided to close about 51, a decision it attributes to the pandemic. Most of those store closures have already begun, and the company has moved inventory from the targeted stores to distribution centers. The retailer is proceeding with plans to reopen the majority of stores it shut due to the pandemic.
It has more than 500 stores worldwide and employs 4,025 people.
“We are in the process of identifying the right owner, or owners, to lead our iconic Brooks Brothers brand into the future,” the spokesperson said.
“It is critical that any potential buyer aligns with our core values, culture, and ambitions. Further details on the sale process will be made available in the coming days,” the spokesperson added.
Brooks Brothers generated more than $991 million in sales last year, roughly 20% of which were online. It has wholesale agreements with retailers like Macy’s and Nordstrom, and contracts to manufacture uniforms for NetJets, United Airlines and others.
To support its operations in bankruptcy, Brooks Brothers has secured $75 million in debtor in possession financing from brand management firm WHP Global, which is backed by Oaktree Capital and Blackrock. That comes on top of a $20 million loan it secured from Gordon Brothers in May.
By Aug. 15, it will cease its manufacturing work at facilities in Massachusetts, North Carolina and New York, where it produces suits, ties and some shirts. Those facilities produce about 7% of the brand’s goods.
Brooks Brothers is merely the latest retailer to succumb to the pandemic. It follows on the heels of Neiman Marcus, J. Crew and J.C. Penney, which have all filed for court protection in the last few months.
But unlike many retail trailblazers, Brooks Brothers is not buckling from debt leftover from a private equity-led leveraged buyout that left its owner unable to invest in the storied brand.
Instead, it is owned by its CEO, Claudio Del Vecchio. Del Vecchio, son of the founder of Italian eyewear giant Luxottica, has focused on restoring the brand’s quality since acquiring it from British retailer Marks & Spencer in 2001.
Those efforts appear to have borne fruit. One senior banker who spoke to CNBC said he still wears the brand’s basics under his more expensive suits. He requested anonymity because he did not want to talk publicly about his basic wear.
But leases from the expansion of its footprint have become costly. The retailer had roughly 160 retail stores in the U.S. when Del Vecchio acquired it two decades ago, about two-thirds of the 236 U.S. stores and outlets it currently claims.
And, like every retailer, it has had to rethink its retail strategy as the coronavirus pandemic has forced its stores to close.
Meanwhile, competition from younger brands like Bonobos and Lululemon has cropped up, even as Brooks Brothers has expanded further into sportswear and brought in trendy designer Zak Posen to reach more modern customers.
And as the unemployment rate rises and those who do have jobs continue to work from home, it is increasingly difficult to get Americans to buy nicer clothes, let alone wear them.
Retail traffic declines have accelerated over the past two weeks, as Covid-19 cases surge nationwide, including hotspots in Florida and Texas.
— CNBC’s Lauren Thomas contributed to this report.