L Brands will no longer sell Victoria’s Secret to Sycamore Partners, a private equity investor. The firms said on Monday that they had reached a mutual agreement to terminate the deal. The announcement came after L Brands and Sycamore sparred in court about moving forward with the transaction based on Victoria’s Secret’s response to the coronavirus outbreak.
Sycamore had agreed to buy a majority of Victoria’s Secret from the embattled L Brands in February for $525 million in a deal that was expected to close this spring. Bath & Body Works, which is also owned by L Brands, would become a stand-alone public company. But Sycamore tried to back out of the agreement as the pandemic forced Victoria’s Secret, and much of the retail industry, to temporarily close stores and furlough staff.
L Brands said on Monday that it planned to move forward with establishing Bath & Body Works and Victoria’s Secret as two separate companies. Leslie H. Wexner, the chief executive of L Brands, will still step down from his roles as the company’s chief executive and chairman. L Brands’ board appointed Stuart Burgdoerfer, the chief financial officer of L Brands, to become the brand’s interim chief executive, effective immediately.
One week after the Paycheck Protection Program began backing a second round of small-business relief loans, $175 billion of the program’s $310 billion in remaining funding has been committed, according to the Treasury Department and Small Business Administration.
About 2.2 million applicants have been approved for loans so far in this round, with an average size of $79,000, the agencies said. That’s far smaller than the $206,000 average in the program’s first $342 billion lending round, when publicly traded companies and other larger organizations sucked up billions of dollars.
Steep demand overwhelmed the Small Business Administration’s computer system early last week, preventing many banks from having their customers’ applications processed. Lenders said the crush began to ease toward the end of the week, and Treasury Secretary Steven Mnuchin said on Monday that the backlog had been cleared.
JPMorgan Chase, the program’s largest lender in the first round, said on Friday that it had approved 211,000 additional loans, bringing its lending through the program to $29 billion. Bank of America said on Monday that it approved 256,000 applications in the last week, bringing its total lending to nearly $25 billion. Citigroup said it submitted just over $3 billion in loans to the S.B.A. for approval in the last week.
But many questions remain about the program’s murky rules — particularly those involving loan forgiveness for businesses that use the money to retain or rehire workers. The earliest loan recipients will be able to seek forgiveness at the end of this month. The Treasury and S.B.A. said Sunday that they planned to issue additional rules and guidance.
Public companies return millions in loans set aside for small businesses.
Publicly traded companies have given back more than $375 billion in federal stimulus loans meant to help small businesses stay afloat, according to a New York Times analysis of securities filings and public announcements. Many of the companies began returning the loans after their disclosures raised an outcry that the stimulus program was steering money to major corporations instead of smaller operations like independent retailers and restaurants.
Nine of the 10 largest known loans issued to public companies have or will be returned, the Times analysis shows. The outlier, a loan to BBQ Holdings, which owns several hospitality brands including Famous Dave’s BBQ, was first disclosed on Friday.
Ashford Inc., which oversees a network of hotels and resorts including Ritz Carltons and one of the biggest beneficiaries of the program, said on Saturday that it and its subsidiaries would return $68.8 million in loans after mounting criticism from policymakers and members of the public. So far, at least 35 public and private companies have returned their loans.
With the lending program under scrutiny, federal officials in late April began putting new policies in place to limit which public companies could receive the stimulus aid. Public companies with access to other capital are not likely to be eligible to receive loans, and companies that returned the money by May 7 would not face penalties.
Lawrence Summers says the government needs to do far more to save the economy.
Lawrence H. Summers, the former Treasury secretary, said Monday that the government’s work was far from done in keeping the U.S. economy from slipping into a disaster zone.
Mr. Summers called for an ambitious program of federal public works, expanded wage supplements and grants to states and local governments — along with an aggressive public health campaign to extend coronavirus testing and tracing and develop drugs and vaccines.
Although he warned against oversize deficits during the 2008 financial crisis and recession, Mr. Summers said he was much more concerned about doing too little in this crisis than about doing too much.
During a webinar hosted by the Economic Club of New York, he said that efforts to stem the economic damage would inevitably involve waste and encounter dead ends, but that “conventional economic efficiency should not be what you should be doing during a war.”
Mr. Summers, who was Treasury secretary in the Clinton administration and head of the National Economic Council under President Barack Obama, is now advising the presidential campaign of Joseph R. Biden Jr., the presumptive Democratic nominee.
He said he was more pessimistic about the economic outlook than he was a month ago, but added that weighing economic goals against public health considerations was a false choice. The economy will not revive, he said, without halting contagion or providing better treatments.
Both Mr. Summers and R. Glenn Hubbard, chairman of the Council of Economic Advisers under President George W. Bush, said they were puzzled by the stock market’s continued resilience. “I think the market is probably wrong,” Mr. Summers said.
As for bolstering the economy, Mr. Summers said the unemployment insurance system should in effect be supplemented with a generous and longer-lasting “employment insurance” program that would help support work-sharing arrangements. “I would focus on protecting people and protecting their incomes” rather than bailing out larger corporations, he said.
Wind turbines, solar panels and hydroelectric plants are supplying more electricity to the United States than coal-fired power plants since the coronavirus outbreak spread widely, according to an analysis published on Monday.
Renewable energy sources supplied more power to the electric grid than coal-fired plants in April, the first full month they have ever done so, according to a review of government data by the Institute for Energy Economics and Financial Analysis.
The energy institute found that coal supplied less than 20 percent of the country’s electricity in January and dropped to just 15.3 percent in April. As recently as 2008, coal accounted for about half of the nation’s electricity.
The shares of the four biggest U.S. airlines — Delta Air Lines, United Airlines, American Airlines and Southwest Airlines — fell sharply on Monday after Warren Buffett said that he had dumped his stakes in the companies.
“We like those airlines, but the world has changed for the airlines,” Mr. Buffett said on Saturday during the annual shareholder meeting of his conglomerate, Berkshire Hathaway. “I don’t know how it’s changed and I hope it corrects itself in a reasonably prompt way.”
Mr. Buffett invested in those companies in 2016 after rejecting the industry for years. In an interview with CNBC at the time, he said that airlines had been “a disaster for capital,” but said that he believed that the industry had gotten “a bad first century” out of the way. Indeed, airlines had enjoyed a rare yearslong streak of profitability before the pandemic.
The existential crisis the industry now finds itself in has started to spread to their suppliers. On Monday, General Electric’s aviation unit, which makes engines and other aircraft components, said it is planning to cut up to 25 percent of its work force, a reduction of about 13,000 hourly and salaried employees. Last week, Boeing said it expected it would take years for passenger demand to recover and is planning to cut 16,000 jobs.
Stocks rebound from early decline as technology share rally.
Stocks on Wall Street inched higher on Monday, following a drop in Europe and Asia, as investors remained on edge about the severity of the economic downturn.
The S&P 500 was less than half a percent higher, after recovering from early losses in part because of a rebound in shares of large technology companies.
Markets have been pushed and pulled by two competing ideas lately. Encouraged by the progress made in combating the coronavirus pandemic and hopeful that economies will begin to reopen soon, investors bid stocks sharply higher in April. But that optimism has been undermined as evidence of the damage caused by the coronavirus pandemic to employment, corporate profits and the broader economy continues to roll in.
For the last few days, the focus has been on the risks. On Monday, sentiment was hurt by rising tensions between the United States and China.
The Trump administration, under pressure for its own bungles in dealing with the outbreak, has ramped up criticism of China’s response. President Trump said on Sunday that the Chinese government made a “horrible mistake” in its coronavirus response and then orchestrated a cover-up that allowed the pathogen to spread around the world. He has threatened new tariffs on Chinese products in response.
In some global markets, the drop was partly a catch-up to trading on Friday. Stocks in France and Germany, which had been closed Friday, fell more than 3 percent. But the FTSE 100 in Britain, which did trade on Friday, was only slightly lower.
DoorDash says it will expand quarantine pay for its gig workers.
In an agreement with Pennsylvania’s attorney general, DoorDash is expanding quarantine pay for the gig workers who make its deliveries, providing subsidized tele-health and offering temporary financial assistance for child care.
The deal, which applies to DoorDash workers around the country, was sought by the office of Pennsylvania’s attorney general, which had pushed for fair labor practices at gig economy companies. The attorney general, Josh Shapiro, said he hoped the changes DoorDash was making would “inspire others to act.”
The coronavirus pandemic has elevated concerns about the gig economy model, which offers workers flexibility but does not provide traditional employment protections like paid sick leave and medical insurance.
Since the outbreak in the United States, gig employers like DoorDash and Uber have begun to provide limited sick pay for workers who are diagnosed with the virus. Uber has asked federal lawmakers to shield it from lawsuits over worker misclassification in exchange for providing medical supplies and compensation during the pandemic.
J. Crew, known for producing preppy fashion with mass market appeal, filed for bankruptcy on Monday, making it the first major retailer to fall victim to the pandemic that has hobbled the world economy.
The company, whose popularity was lifted more than a decade ago by one of its most prominent fans, Michelle Obama, had amassed enormous debt even before the outbreak. Since then, it has seen sales virtually wiped out at more than 170 J. Crew stores and a further 140 operated under the popular Madewell brand that it also owns.
J. Crew had struggled to keep up with changing tastes, but appeared to be adapting in recent months, having named Jan Singer, formerly of Nike and Victoria’s Secret, its new chief executive. The company had been planning an initial public offering this spring of Madewell, a denim brand popular among millennials, to pay down debt and revamp the J. Crew brand.
J. Crew is the first major retailer to fall to the coronavirus, but it is unlikely to be the last. The pandemic halved sales of clothing and related accessories in March and is believed to have had an even greater effect in April. Neiman Marcus is carrying significant debt, for example. And Brooks Brothers is already facing questions about its future.
Catch up: Here’s what else is happening.
Costco, the club retailer, has started to limit the amount of meat customers can buy at once. The company said in an update on its website on Monday that fresh beef, pork and poultry products would be “temporarily limited to 3 items” per member. The limits come as production in the meat industry slows after widespread illnesses in slaughterhouses across the Midwest and South.
The cruise giant Carnival Corporation said on Monday that it planned to reopen cruising on eight of its ships before the end of the summer. Carnival has canceled service on some of its cruise lines through September, but it said it was planning to offer cruises from ports in Galveston, Tex.; Miami; and Port Canaveral, Fla., as early as Aug. 1.
Intel said it would pay $900 million to acquire Moovit, the maker of an app that provides directions based on real-time traffic data, a rare deal in the current environment. The acquisition will complement Intel Mobileye, the company’s growing autonomous driving unit, which produces hardware and software for driving-assistance features used in vehicles across the industry.
Reporting was contributed by Patricia Cohen, Ivan Penn, Stacy Cowley, Alexandra Stevenson, Kate Conger, Michael Corkery, David Yaffe-Bellany, Vanessa Friedman, Andrew Ross Sorkin, Mihir Zaveri, Jeanna Smialek, Niraj Chokshi, Brooks Barnes, Mohammed Hadi, Austin Ramzy, Michael J. de la Merced, Carlos Tejada, Noam Scheiber, David McCabe, Marc Tracy and Sapna Maheshwari.