After a brutal stretch — when the coronavirus shutdown exploded into a fit of rage over institutional racism in America — last week ended with a small sliver of good news on the battered economic scene.
But however welcome the unexpected improvement in the job market was, with unemployment improving to 13.3 percent last month from 14.4 percent in April, there is now the issue of momentum.
Most economists have given up hope that the economy will have a V-shaped recovery, with a quick fall and quick bounce-back, but are merchants starting to get any sense of traction?
The quarterly updates from fashion companies so far have been mostly tough reading and shown intense financial strain. TJX Cos. Inc., Kohl’s Corp. and Nordstrom Inc. each recorded first-quarter net losses of more than $500 million (with a combined total of more than $1.9 billion for the three companies).
But there have been some positive signs. Web sites have generally been on fire and posting big gains while stores have proven to be flexible, shifting for instance to curbside pickup quickly, and are reopening with some restrictions. And consumer confidence, while down sharply, did hold steady last month, suggesting some stabilization.
There are potential sources for more good news this week including:
• Stitch Fix Inc. laid off workers last week, but has a try-on-at-home and tech-heavy model that has garnered more interest during the COVID-19 shutdown and reports quarterly results after the market today.
• Macy’s Inc. releases a more-complete take on its quarter on Tuesday and could give an update on its refinancing efforts.
• Target Corp., which has stayed open through the shutdown as an essential retailer, holds its annual meeting Wednesday and could give an update.
• Lululemon Athletica Inc. reports results on Thursday having come into the crisis in a very strong financial position and benefiting from its stay-at-home friendly ath-leisure emphasis. Tommy Hilfiger and Calvin Klein parent PVH Corp. also reports its results on Thursday. Both companies are large and influential and will give fresh takes on key parts of the market.
• Signet Jewelers Inc., Movado Group Inc., Chico’s FAS Inc., Guess Inc., Oxford Industries Inc. and Christopher & Banks Corp. all weigh in with quarterly results as well.
Investors are clearly primed for good news. Wall Street rallied on the new jobs numbers, pushing the Dow Jones Industrial Average up 3.2 percent, or 829.16 points, on Friday to 27,110.98. Fashion companies were among the big gainers. Among those perking up were Ascena Retail Group Inc., ahead 43.5 percent to $2.76; Tailored Brands Inc., 21.9 percent to $1.84; Fossil Group Inc., 20.4 percent to $5.25; Chico’s, 18.3 percent to $2.17; Simon Property Group Inc., 15.8 percent to $88.60; Kohl’s Corp., 11.5 percent to $26.58; PVH Corp., 9.9 percent to $62.75; Macy’s Inc., 6.8 percent to $8.77; VF Corp., 6.6 percent to $68.31, and Nordstrom Inc., 6 percent to $22.62.
At the same time, there’s more than enough reason for continued caution. The nation is still grappling with the killing of George Floyd at the hands of police and while the protests have been largely peaceful, they have also led in some instances to vandalism and looting. That has forced some retailers to push back their planned reopening following the COVID-19 shutdown.
And while there has been some progress on the job front, the employment market is still a long way from reaching its new normal.
Last month, retailers added back 368,000 jobs in May after cutting headcount by 2.3 million in April.
Apparel and accessories specialty stores added back 94,800 workers, boosting the sector’s workforce to 594,900, but still well below the 1.3 million seen a year earlier. Department stores added back 47,100 positions to employ 849,100, down from the 1.1 million a year earlier.
Across the U.S. economy, 2.5 million jobs were added back, promising — but still a small portion of the 20.5 million positions that were cut in April.
Employment is seen as the single biggest factor underlying consumer spending, so a return to Great Depression unemployment levels, even for a short while, could have a devastating effect on fashion and the economy.
Last week, the nonpartisan Congressional Budget Office cut its 10-year economic projection, declaring that the nation’s economic output would be $15.7 trillion less over this decade than it forecast just before the COVID-19 crisis hit in earnest.