fortune--2020-05-04--Inside China’s reopening: A Wuhan college student still avoids restaurants and public transit

This is part of a series on China’s emergence from coronavirus lockdowns, featuring seven people who are living it.
White spring blossom petals dusted the sidewalks of Wuhan, China, when the city emerged from its massive coronavirus lockdown—the first the world had seen—on April 8. The date marked nearly three months since Zhexuan Huang had left his apartment complex in the city’s Jianghan district, where he lives with his parents and grandmother.
His first outing was a stroll around nearby Xibei Lake, which he called “one of the best walks in my whole life.”
“It felt really, really damn good,” he said.
But for Huang, the sense of relief goes only so far. In the weeks since the lockdown lifted, he’s taken regular trips to the lake, but he hasn’t stepped foot in a restaurant or on public transportation, underscoring how public trust is crucial in returning Wuhan and its peer cities to “normal.”
Huang isn’t there yet. “I just don’t want to take a risk,” he said.
Huang, 21, was supposed to be on the University of Pennsylvania campus on Jan. 23, when Wuhan and two other cities in China’s Hubei province went into lockdown to prevent the spread of the coronavirus.
Instead, Huang, a sophomore who studies mathematical economics, was at home in Wuhan with his family, waiting for his student visa to be renewed. He didn’t get his passport back in time for his flight to Philadelphia. He was still waiting for it when the lockdown came and the government banned all travel out of Wuhan, the epicenter of what would become the global coronavirus pandemic.
At the time, Penn told him remote learning wasn’t possible. When the university ultimately moved all classes online in March because of the virus, Huang had already been forced to take the semester off.
Adjusting to his new, isolated reality was “a gradual, emotional process,” Huang said. After he realized he wouldn’t be returning to college, he tried to find companies in Wuhan offering remote work or internships. None were. “I had all the free time that I needed in the world,” he said.
Xibei Lake in Wuhan, China, which Huang visits often, on April 17. Photo courtesy of Zhexuan Huang
He tried to teach himself French. He took up piano again—he’d been playing since he was 6—and practiced for two hours every day. He loves to play classical music, Chopin in particular.
He learned to cook. Huang and the other tenants in his building ordered groceries as a group, and a government-designated courier delivered them to a central drop-off point. Huang would retrieve his family’s goods and deliver his elderly neighbors’ orders to their doorsteps.
“It’s kind of funny, when I was on campus I really missed Chinese food, but when I’m at home I guess I miss Western cuisine,” Huang said. All the restaurants were shut, and takeout had ceased, so he watched Gordon Ramsay cooking tutorials and cooked steaks and salmon for family meals.
During the most intense period of lockdown, from mid-February to mid-March, he often stood on the balcony of his second-floor flat and stared at the two-lane road below, in normal times buzzing with traffic and passersby, now silent and empty of life. There was “pretty much no sound,” Huang said. “There was no one walking on the street.”
When the lockdown ended, Huang registered the next day for a Wuhan city health code, a downloadable mini-program on WeChat, after hearing about it on local news. He entered his name, address, and national identity card number, and answered questions about possible coronavirus symptoms.
“It’s fairly effective,” Huang said of the system, versions of which are common in many parts of reopened China. The Wuhan edition grants codes based on where you live. If your local community has no confirmed cases, you’ll likely get a green code; if your community has confirmed cases, you’ll get a yellow code; if you yourself are infected, you’ll get a red code.
The moment Huang and his parents received their green QR codes—required for leaving and entering their compound—they headed to Xibei Lake and its surrounding park. It was the first time Huang stepped outside his apartment complex since Jan. 12.
Sunset at Xibei Lake in Wuhan, China, April 17. Photo courtesy of Zhexuan Huang
Many restaurants remain closed. The ones that have reopened offer delivery or outdoor seating and require patrons to undergo a temperature check and show a green health code. Huang hasn’t dined out yet or traveled anywhere in Wuhan besides the lake. He said he might finally feel ready to use public transportation again in a few weeks.
There’s “no specific reason” Huang is waiting to venture about. “I’d just rather wait for more time to pass,” he said.
Despite his misgivings, Huang said the lockdown already feels “like a long time ago.” He has the sense that “everything’s getting back on track.”
On April 27, Wuhan hospitals had discharged all coronavirus patients and the city recorded no new cases. Wuhan’s total confirmed cases stood at 50,333, and the official death count was 3,869 for the city of 11 million. Huang said none of his immediate family or friends got sick.
Many of his college friends from China returned home after classes went online, so it’s easier to talk to them now that they’re in the same time zone. He visits the park to walk or run around the lake every day. “Life is just too good compared to the last two months,” he said.
Huang plans to return to Penn in the fall. He knows the outbreak isn’t over—asymptomatic cases are a worry—but the lockdown feels distant to him, and he struggles to remember some details of life “back then.”
“It feels like history. There’s definitely some things in my life that kind of remind me of the period, like you still have to wear masks every day,” he said. “But the freedom is just—it feels really different.”
Read the other stories in this Fortune series:
—A Shenzhen entrepreneur gets a 6 a.m. throat swab and mandatory quarantine
—A tech founder in Chengdu returns to a changed workplace
—A Shanghai consultant eschews a contact-tracing app
—A startup operations manager in Hangzhou sees automation accelerating
—A Beijing tech worker needs a quarantine certificate to dine out
—A Harbin university professor confronts a second lockdown
Subscribe to Fortune’s forthcoming Eastworld newsletter for expert insight on what’s dominating business in Asia.


fortune--2020-05-04--Inside China’s reopening: A startup operations manager in Hangzhou sees automation accelerating

The cofounders of startup Magic Spoon on breaking into a food industry dominated by legacy players

This is part of a series on China’s emergence from coronavirus lockdowns, featuring seven people who are living it.
E-commerce giant Alibaba was the first company in China to develop the health code apps that have become ubiquitous across China as a means for monitoring local coronavirus infections. But in the company’s hometown, Hangzhou—100 miles southwest of Shanghai, in Zhejiang province—the colored QR codes are already more a formality than a necessity.
“Sometimes when you enter a compound you need to show your code to the security guard, but they never check it seriously,” said Peter Zhou, a 25-year-old Cornell graduate from Shanghai who’s working for a tech startup near Alibaba’s Hangzhou campus. “We just wave the QR code at the guard, and so long as it’s green, it’s okay. I know some people who even just show a screenshot of the code, because it’s easier than opening the health app,” Zhou said.
Yet technology of another kind has taken a firmer hold. Zhou has noticed that in the city of 10 million sometimes dubbed China’s Silicon Valley, manual labor—carried out by virus-susceptible humans—continues to be automated, but now at a quicker clip.
Tourists visit the West Lake park in Hangzhou on Sunday, April 5, 2020. Feature China/Barcroft Media via Getty Images
Hangzhou was one of the first cities that Chinese President Xi Jinping visited on his coronavirus victory tour, designed to inspire confidence in a shuddering economy. Xi was photographed in Hangzhou wetlands, walking with his entourage, none of them wearing face masks.
Zhejiang has had 1,268 reported cases of COVID-19 and one death. Zhou said that daily life in Hangzhou, the provincial capital, has already returned to normal, apart from the occasional flash of a health code and the protective face masks that are now in vogue among residents. The city has even resumed preparations to host the 2022 Asian Games—a continental, quadrennial sports event last convened in Jakarta, Indonesia.
In early April, Hangzhou’s local government unveiled the official games mascots but did so through an online launch, rather than a public ceremony. Workers building the city’s new venues for the games aren’t able to remain remote, however. Construction recommenced in March, with laborers undergoing daily “temperature and health” checks before entering the site.
On Feb. 11, a lone cyclist in Hangzhou passes lanterns hung to celebrate the New Year. Qilai Shen—Bloomberg/Getty Images
Zhou uses one of the city’s shared bikes to cycle 15 minutes to work each morning, alongside a highway clogged with traffic jams. A month ago, when most of the city’s tech sector was working from home, the road was clear. At the height of Hangzhou’s lockdown, public transport was suspended in the city, while underground trains ran at 30-minute intervals. In some districts, households could send only one person outside once every two days.
Now restaurants are filling up again—although some appear to be shuttered for good—and are more relaxed about hygiene than before. In March customers had to fill out a health declaration form and submit to a temperature scan before eating. Zhou says that has stopped now.
The one trend that has caught Zhou’s attention is an acceleration of automation that was happening pre-pandemic. Fast-food restaurants, for instance, long ago installed touch screens that customers can use to order food. Alibaba even partnered with KFC in 2017 to equip screens with face-recognition payment tech.
Zhou says now at McDonald’s, ordering through a screen is the only option. A bottle of hand sanitizer waits nearby to purge whatever germs the screen transmits to customers’ fingertips. It seems safer than spluttering an order toward the staff and their open kitchen.
“Ordering through the screen prevents unnecessary and risky interaction,” Zhou said. “If you can take orders without people, then why not?”
Read the other stories in this Fortune series:
—A Shenzhen entrepreneur gets a 6 a.m. throat swab and mandatory quarantine
—A Wuhan college student still avoids restaurants and public transit
—A tech founder in Chengdu returns to a changed workplace
—A Shanghai consultant eschews a contact-tracing app
—A Beijing tech worker needs a quarantine certificate to dine out
—A Harbin university professor confronts a second lockdown
Subscribe to Fortune’s forthcoming Eastworld newsletter for expert insight on what’s dominating business in Asia.


fortune--2020-05-04--Thousands of canceled internships impact students—but they also hurt colleges

The next four months may be the worst career environment that college students—and college career development offices—have faced since the Great Depression. So Claremont McKenna College is giving its students an unusual edge: It’s subsidizing their internships.
The practice began several years ago, and this year CMC, a liberal arts school in Claremont, Calif., is using it more widely than ever.
“They’re called sponsored internships,” says vice president for advancement Michelle Chamberlain. “CMC provides funding, and students can say to an employer that they’ve applied for funding from CMC.”
That way the employer can reduce or eliminate what it otherwise would have paid that intern.
“This year 625 students applied for the funding, which is a record, and we’ve got $2 million of support for it,” says Chamberlain. “We’re funding 80% to 90% of these.”
That’s great, but this year it’s not good enough: Hundreds of companies across industries—Goodyear, REI, Mercedes-Benz, Southwest Airlines, Under Armour, and many others—are canceling this summer’s internship programs entirely. So CMC is expanding its own internships with faculty members and college organizations. And, in this uniquely awful year, it’s also doing something unprecedented.
“We’re expanding our internship program into the immediate postgraduate environment,” president Hiram Chodosh tells Fortune. Thanks to “a very generous anonymous donor,” he says, this spring’s grads will be eligible for a summer of training in high-value skills and potentially for financial support in low-paid or unpaid work—à la internships—until next June, up to $10,000 per quarter. As Chodosh told the class of 2020, “This funding will enable you to work for an employer who may not be able initially to hire you.”
He tells Fortune: “That puts our students in a competitive position because they won’t have to make as much to support themselves.” Regardless of whether they get hired, they’ll have “months of substantive professional experience.”
CMC’s extraordinary efforts aren’t just good for students—they’re good for CMC. The coronavirus crisis for college students is also, less visibly, a crisis for the colleges they attend. As college costs skyrocket, students and parents increasingly evaluate schools on the percentage of new graduates who get jobs and the quality of those jobs. (Niche.com reports that CMC looks good on those measures: 92% of grads are employed two years after graduation at median pay of $55,900, well above the national average.) The Princeton Review, U.S. News, London’s Times Higher Education magazine, and others publish annual job placement ratings, and school administrators can’t afford to ignore them.
Internships are a critical step in postgraduate jobs. But helping students get into attractive internships this summer after their planned internships have been canceled may be the challenge of a lifetime.
“Our career services staff are working around the clock right now,” says a spokesman for Penn State, which is highly rated for its ability to send graduates into jobs. The school is hoping its alumni will help: “Penn State has more than 700,000 alumni representing every industry and living all over the world,” the spokesman notes. And the school is reminding students of this, urging them to connect with alums through a proprietary networking platform. Many other schools with strong employability rankings, including Babson, Duke, Lehigh, and Georgia Tech, are doing the same.
But beyond engaging alumni, and rare heroic efforts like Claremont McKenna’s, there’s not a lot that schools can do in a world where tens of thousands of intern positions have evaporated. Many students will have to accept that this year an internship just might not be in the cards. Babson’s career development chief, Donna Sosnowski, says that after network mining and searching in industries that are still growing, she’s advising students to “invest in yourself and upskill” by taking online classes or getting certifications.
Even the relatively lucky students whose internships will now be virtual rather than in-person are unlikely to get the career boost that they and their schools were hoping for. Infosys, whose internship program has ranked No. 1 at Vault.com for the past two years, is announcing today that this summer’s program will be virtual. That’s undoubtedly a relief for the 200 or so students who will participate, but students in all highly rated internship programs inevitably report that the greatest value comes from the in-person experience.
“I ended up on an interesting project while walking around campus instead of waiting for the opportunity to come to me,” a previous Infosys intern says in a review on Handshake, a site that connects college students with jobs. More important, the meaningful personal connections that are crucial to any career mostly happen face-to-face. Another previous Infosys intern reports that “the best part about the experience by far was getting to meet and work with interns from around the world.” This year it won’t be the same.
Through nothing but bad luck, many of today’s college students may be disadvantaged in the years ahead as they compete with older and younger workers. But for colleges, this recession is, like all problems, an opportunity. While the raw statistics of job placement will likely be lower for practically all schools, the most important numbers will be the rankings. Career development offices will be tested like never before, and a new set of winners may emerge. One of the clearest lessons from past recessions is that they scramble the competitive order in many industries. A year or two from now, after the trauma of this year’s internship experience is over, those all-important college job-placement rankings may look very different.
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—The trillion-dollar question: How far will GDP fall?
—How each industry is fueling the U.S. unemployment rate in one chart
—What we can learn from China’s color-coded apps for tracking the coronavirus
—The retailers that are smartest about tech will finish on top in the wake of the pandemic
—Big Pharma has the chance to come to the world’s rescue
—More surveillance and less privacy will be the new normal after the coronavirus has been contained
—WATCH: Ford CEO Jim Hackett on the company’s pivot to combat the coronavirus
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fortune--2020-05-04--January? This fall? Scientists continue to debate when a coronavirus vaccine will arrive

Researchers continue to debate how fast a coronavirus vaccine may be available as states and nations look for a fast track to recovery from the pandemic’s economic toll, with January or even the fall now on the timetable.
British scientists hope to see a “signal” on whether their vaccine candidate is working by June, John Bell, professor of medicine at Oxford University, said on Sunday.
The chances are “pretty good” of a vaccine within the year, Bell said on NBC’s “Meet the Press.” He downplayed a colleague’s suggestion that there’s an 80% chance, though. Vaccines can typically take at least several years to develop.
The U.K. is co-hosting a conference on Monday with the aim of encouraging countries to pledge funds to international efforts to develop a vaccine. Britain has committed 388 million pounds ($484 million) to the project.
“We must work together to build an impregnable shield around all our people,” Prime Minister Boris Johnson will tell the meeting, according to a government official. “That can only be achieved by developing and mass producing a vaccine.”
The White House last week announced an initiative, dubbed “Operation Warp Speed,” to try to develop a vaccine and have enough doses for many Americans by January. Some 14 potential candidates will undergo testing, NBC News reported, before the contenders are whittled down to six or eight.
Dr. Deborah Birx, a member of the White House coronavirus task force, said that “on paper, it’s possible” that the unusually swift deadline could be met.
“The way that it’s possible is if you bring forward five or six different classes of candidates,” Birx said on “Fox News Sunday.”
“And then it’s about doing compressed phase one, phase two, phase three trials in an overlapping way, moving forward when you have a good safety and immunogenicity data, but not with the level of pauses that are often present in vaccine development,” she said.
Scott Gottlieb, former head of the U.S. Food and Drug Administration, said vaccines may be available in the autumn “in doses sufficient to ring-fence infections in cities” even as further testing is under way.
Multiple manufacturers by that time will have “cleared early stage safety trials and have millions of doses that could be deployed in large-scale studies,” Gottlieb predicted on CBS’s “Face the Nation.”
The U.S. has more than 1.15 million confirmed cases of Covid-19, and has recorded over 67,000 deaths.
Some 20,000 to 30,000 new infections and over 1,000 deaths in the U.S. each day could become the “new normal” for the next few months, Gottlieb said. Deaths could reach 100,000 by the end of June.
Gottlieb expanded on a Twitter post from earlier that showed national infections, hospitalizations and deaths continue to rise, excluding the New York tristate area that has been the hardest hit so far.
“While mitigation didn’t fail, I think it’s fair to say that it didn’t work as well as we expected,” he said. Among the states still seeing cases increase are Illinois, Texas, Indiana and North Carolina.
Oxford’s Bell said the coronavirus vaccine, once developed, may become an annual event, like the seasonal flu jab that millions of people around the world receive.
“Coronavirus doesn’t mutate at the pace of flu as far as we can see. But it’s also quite a tricky virus in terms of generating longstanding immune responses to it,” Bell said. “We may need to have relatively regular vaccinations against coronaviruses going into the future.”
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—WATCH: Fortune’s top 10 heroes of the coronavirus pandemic
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fortune--2020-05-05--Europe’s reopening road map: How 11 countries are beginning to lift lockdowns

Fortune poll : How many Americans are still waiting for their coronavirus stimulus checks

Europe is gingerly trying to get back to business, with restrictions loosening across the continent as the spread of the coronavirus slows.
The German Spy Museum in Berlin opened its doors for the first time in weeks, bars in central Rome began offering takeaway services, and shaggy-haired Austrians flocked to barbers’ shops in Vienna.
With Italy, Spain, Greece, Portugal and Germany all relaxing some of their restrictions on Monday, Europe is settling down to a new normal as it returns to public life. It’s slower and less dynamic than before, and some restrictions will remain in place for weeks or even months, with face masks—ranging from clinical coverings to brightly colored homemade varieties—a ubiquitous reminder of the changes.
While the moves will ease pressure on economies, the partial reopening means it’s still far from business as usual. Under a “mild” scenario published by the European Central Bank on Friday, the euro-area economy will shrink 5% this year. More severe potential outcomes point to contractions of 8% and 12%, and output may not reach pre-pandemic levels until the end of 2022.
“We will be lucky if we earn a quarter of what we used to,” Stefano Capuzzi said during a short break from serving customers at the Trastevere Bar near the banks of the River Tiber in Rome. Having a coffee means enjoying a quick chat, “not running away with a hot plastic cup,” said the 42-year-old bartender, who nevertheless had sold more than 100 espressos and dozens of pastries in the early morning rush.
After more than 120,000 deaths in Europe, leaders are being careful in opening the economy amid concerns that a new spike in infections will make the crisis longer and deeper.
Austrian Chancellor Sebastian Kurz told Swiss daily newspaper Blick that a second wave is “a realistic scenario” and that the key question is “whether infections can be kept in check regionally and isolate patients quickly.”
For now, most of the data is reassuring. Germany reported the lowest number of new infections and deaths since at least March 30, and Spain’s daily fatalities and new cases hovered at lows last seen before restrictions were introduced in early March. Italy, Europe’s original epicenter, also recorded new cases and deaths that were around initial lockdown lows. France, which begins loosening confinement on May 11, reported more than 300 fatalities for the first time this month.
In Portugal, citizens are finally getting their hair cut as well, with barbers allowed to reopen along with small shops, bookstores and car dealerships. Malls and the largest stores will have to wait until June 1, while restaurants can start serving again on May 18 with capacity limited to 50%. The use of masks is required on public transport and in shops.
In central Athens, Hamosternas—one of the city’s main thoroughfares—showed signs of a gradual return to normality with more traffic than during weeks of lockdown. Customers at hair salons waited on the street rather than on sofas inside, while supermarkets and pharmacies became stricter about social-distancing measures as more people ventured out.
With outbreaks varying by severity and the pace of the openings also differing, the economic impact will be uneven. Germany’s gross domestic product is expected to fall 5.5% this year, according to Bloomberg Economics. In Italy, the shock may lead to a 13% contraction.
Several museums in the German capital are working out how they can minimize the health risks when opening up again. State-run museums including the Neues Museum, home to the famed Nefertiti ancient Egyptian bust, remain closed for now, but a Dali exhibit near Potsdamer Platz and the East Germany-themed DDR Museum near Alexanderplatz opened Monday for the first time since mid-March.
The Spy Museum was handing out free pens to attendees—not for taking notes on the artifacts of Cold War espionage like lipstick cameras and decoding machines—but to reduce the risk of spreading germs when operating touch-screens. Alongside time-slot tickets and glass barriers in front of ticketing personnel, the measures were some of the numerous ways, large and small, the pandemic is changing European life.
In Spain, which has been hit hard by the lockdown’s impact on tourism, traffic was sparse in the neighborhood around Real Madrid’s soccer stadium, with its normally bustling shops and restaurants. As “phase zero” of the government’s easing plan gets under way, some businesses worry about holding on.
At Zapataria Martos, a traditional cobbler in Madrid, Eduardo Martos is fatalistic about his prospects. Business has been in decline because fewer people wear leather shoes, and the crisis may finish off the shop that’s been in his family for 40 years.
“I’m going to give it until 2021 to see if things pick up,” said Martos. “If not, I’ll have to shut up shop and try something else like being an Uber driver.”
Europe’s easing road map
Italy
May 4: Construction, manufacturing to resume; restaurants allowed to offer limited take-away services
May 18: Retailers, museums to reopen
June 1: Bars, restaurants, hair salons to possibly reopen
Schools to remain shut until September
Spain
April 28: Prime Minister Pedro Sanchez announces plans to return to a “new normal” over the next eight weeks, with measures depending on infections and differing by region
May 2: People allowed out for walks and exercise, after children allowed to leave their homes on April 26
May 4: Certain businesses, such as hairdressers, allowed to open nationwide by appointment. Bars and restaurants allowed to serve pre-ordered takeaways; restaurants and bars allowed to serve the public at limited capacity on Formentara in the Mediterranean and three of the Canary Islands in the Atlantic
May 6: Government to seek two-week extension for state of emergency, which currently ends on May 9
Germany
April 20: small shops, hardware stores and car dealerships allowed to reopen
May 4: Partial school reopenings, hairdressers reopen
May 6: Chancellor Merkel, state premiers to discuss possible further easing of curbs
After Aug. 31: large events such as soccer matches, concerts and festivals may be allowed
France
May 11: Official start of gradual end of lockdown
Switzerland
April 27: Hairdressers, garden centers, do-it-yourself stores and tattoo studios reopen
May 11: More retailers resume, as do museums and libraries. Restaurants and sporting facilities may reopen
June 8: Universities may reopen, professional football matches without spectators may be held
Austria
April 14: Small shops, hardware and gardening stores reopened
May 2: Larger stores as well as services like hairdressers resumed
May 15: Places of worships and restaurants reopen
May 18: Most students return in split groups
May 29: Hotels allowed to reopen
Netherlands
May 11: Primary schools will partially reopen, and adolescents can resume group sports under certain conditions
From June 2: Other schools and universities should prepare to open
Sept. 1: Large events, including professional soccer and music festivals, might resume
Belgium
May 4: all wholesale businesses in non-essential industries allowed to reopen physically
May 11: Scheduled reopen date for all retailers, with exception of “contact businesses” such as hairdressers as well as bars and restaurants
May 18: Target date for hairdressers, beauty salons, tattoo studios
Portugal
May 4: Small shops, hairdressers, bookstores and car dealerships can restart
May 18: Restaurants can resume operations, with capacity limited to 50%; museums can reopen
June 1: Larger stores, malls, movie theaters and nurseries can reopen
Greece
May 4: Greeks can leave their homes to get a haircut, buy a book or to visit a church
May 11: Most of the rest of the retail sector reopens
June 1 : Malls can resume operation
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fortune--2020-05-05--Hertz’s stock tanks as rental car firm reportedly braces for bankruptcy

Hertz Global Holdings saw its stock fall more than 20% in after-hours trading Monday after it emerged that the rental car company has reportedly taken another step towards a potential bankruptcy filing.
Hertz is said to have retained management consulting giant FTI Consulting to help streamline and restructure operations in advance of an increasingly likely Chapter 11 filing, the Wall Street Journal reported on Monday, citing sources familiar with the matter.
The publication first reported that Hertz was preparing for bankruptcy last month after the rental car firm failed to make lease payments on its fleet of rental cars. In addition to FTI, Hertz is reportedly working with law firm White & Case and investment bank Moelis & Co. as it looks to restructure $17 billion of debt on its books.
Hertz—which in addition to its eponymous rental brand also owns and operates Thrifty Car Rental and Dollar Rent A Car—has been devastated by the coronavirus pandemic and the subsequent economic shutdown. Rental-car ridership has plummeted as travel and tourism has come to a relative standstill during the pandemic, leaving Hertz to lay off 10,000 employees last month.
The company’s stock price has reflected these challenges: It’s swooned from its 52-week high of nearly $21 per share in late February, just before the gravity of the pandemic became apparent and sent markets globally into freefall. Hertz’s stock closed at $3.59 per share on Monday—and the news that FTI has been brought in to advise on a bankruptcy filing sent that even lower after hours, to well under $3 per share.
Hertz and other rental car companies were already losing market share even before the pandemic, as the rise of ride-sharing firms like Uber and Lyft have gradually eaten away at their business. Hertz ranked #331 on the 2019 Fortune 500, up four places from the previous year with revenues exceeding $9.5 billion.
Representatives for Hertz did not immediately return a request for comment.
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Subscribe to How To Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic


fortune--2020-05-04--Neiman Marcus nears bankruptcy deal in Pimco-led takeover

Neiman Marcus Group Inc. is closing in on a deal with lenders led by Pacific Investment Management Co. that would slash the department-store chain’s debt load by more than half in exchange for control of the company, according to people with knowledge of the matter.
The plan would be part of a bankruptcy court filing that could come as soon as this week, the people said. Lenders including Pimco, Davidson Kempner Capital Management and Sixth Street Partners would provide the company with more than $600 million to stay in business during the court process, said the people, who asked not to be identified because the discussions are private. Those lenders and others would swap their debt for equity in the reorganized company.
Representatives for Neiman Marcus, Pimco, Davidson Kempner and Sixth Street declined to comment.
Neiman has struggled for years to find its footing as traffic fell at malls and department stores. The Dallas-based company reached a deal with creditors last year that bought it time for a turnaround. But with its stores shuttered since March by the Covid-19 pandemic, efforts to cut its more than $4.3 billion of debt took on a new level of urgency.
The retailer had been considering a competing financing proposal from a second group of creditors including Mudrick Capital Management that would provide the retailer with $700 million of capital, people with knowledge of the talks said. The proposal was contingent on the company pursuing an outright sale in bankruptcy, rather than a debt restructuring. Neiman rejected that plan, the people said.
Retailer distress
Neiman, which is owned by Ares Management Corp. and the Canada Pension Plan Investment Board, is among a number of retailers with heavy debt loads that are now threatening to be toppled by the pandemic.
Preppy apparel retailer J. Crew Group Inc. filed for bankruptcy on Monday with plans to hand control to its lenders. J.C. Penney Co. has been in talks with its lenders after skipping an April 15 bond interest payment.
Neiman Marcus, for now, intends to maintain most of its stores through the restructuring, the people said. Some could later be closed after additional reviews of their performance, they said.
Neiman manages more than 40 namesake stores across the U.S., two Bergdorf Goodman stores in Manhattan, two dozen Last Call locations and a Mytheresa in Germany. The latter is a brick-and-mortar version of its fast-growing Mytheresa online merchant.
More must-read retail coverage from Fortune:
—Bankruptcy gives J.Crew a chance to reinvent itself (again)
—How cannabis purveyors are coping during the pandemic
—Vending machines—the original contactless delivery—now deliver ramen and art
—How luxury fashion shopping habits are shifting during the coronavirus pandemic
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: The ugly toll COVID-19 has taken on retail
Subscribe to How To Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic


fortune--2020-05-04--Disney earnings preview: A sprawling media empire in the deep end

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In late February, when current Disney chairman Bob Iger stunned the business world with news of his sudden resignation as chief executive, the move was portrayed as a matter of good timing.
“With the successful launch of Disney’s direct-to-consumer businesses and the integration of Twenty-First Century Fox well underway, I believe this is the optimal time to transition to a new CEO,” Iger said in a statement, referring to the highly anticipated rollout of its Disney+ streaming service and the company’s $71 billion acquisition of Fox and its prized characters, movie studios, and television networks.
Those moves—along with its previous gobbling up of Pixar, Marvel, and Lucasfilm—had turned Disney into perhaps the strongest legacy media company in the U.S. Incoming CEO Bob Chapek, the veteran leader of the company’s lucrative parks and cruise division, would take over in a prosperous period of stability.
Or so it seemed. On March 16, just three weeks after the CEO announcement, Disney’s theme parks were indefinitely shuttered out of concern of the novel coronavirus pandemic. Since then, strict worldwide lockdown measures have intensified and Disney’s stock price has dropped to almost half of its 52-week high.
On Tuesday May 5, investors and industry observers alike will be listening to Chapek’s first quarterly earnings call as CEO to gain insight into COVID-19’s impact on Disney’s broad and diverse collection of businesses.
While virtually every company is grappling with the effects of the virus in some capacity, Disney appears more vulnerable than most. Almost every segment of its vast empire is particularly reliant on assembling people. Along with its 14 theme parks and four cruise ships, Disney lays claim to retail stores, Broadway shows, a live (and largely sports-less) ESPN, and shuttered movie theaters (which has resulted in the delayed release of tentpoles like a revived Mulan and the Scarlett Johansson-starring superhero flick Black Widow).
Even Disney+ is susceptible. Though the streaming service attracted 50 million subscribers worldwide just five months after launch (in a landscape of record streaming viewership), most movie and television production is shut down across Hollywood. (Though its big hit, the Star Wars spinoff The Mandalorian, finished production of its second season in time.) The ramifications of that affect not just Disney+ but Disney-owned networks like ABC and FX, too.
“The deleterious effect of the pandemic should manifest across [Disney’s] far-flung businesses,” wrote CFRA media analyst Tuna Amobi in a research note, “including the closure of its worldwide theme parks, suspension of its cruise and theatrical shows, delays in its worldwide theatrical releases and supply chain disruptions, as well as negative impact on ad sales and disruption in content availability (including the cancellation of sports events and shutdown of film/TV production).”
Wall Street analysts estimate that Disney’s Q2 earnings per share will come in at $0.83—down 78 cents, or 48%, from a year earlier. Revenue is expected to be up nearly 21% to $18.3 billion, though it’s important to note that the company’s fiscal quarter ended March 31, just a few weeks after serious COVID-19 disruptions began to affect its business.
“It’s pretty clear to investors that Disney sits at the center of the storm for COVID,” Bernstein Research analyst Mike Morton wrote in recent note, “whether we’re talking parks or studio and the impact on people visiting movie theaters to a knock-on effect or a recession and what that that will stimulate for cord cutting.”
Disney has access to more than $13 billion of credit in the event that things get dire. The Burbank, Calif. company closed a $5 billion agreement with Citibank in April. Neil Begley, a bond and credit analyst and vice president at Moody’s, wrote in a March report that “Disney has significant liquidity to help carry it through this ‘black swan’ crisis.”
But some Wall Streeters remain concerned. Leading media analyst Michael Nathanson on Monday downgraded his rating of Disney’s stock from “buy” to “neutral,” lowering the company’s price target by $8 to $112.
“While Disney has the advantaged assets to win in this new world, we fear that the uncertainty of the present situation creates significant and unrivaled earnings risk for the foreseeable future,” he wrote in a report. “We believe the economic impact on the company will be longer than most anticipate, especially given the risks of a second wave of infections after reopening.”
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fortune--2020-05-04--Fortune poll: How many Americans are still waiting for their coronavirus stimulus checks

Europe ’ s reopening road map : How 11 countries are beginning to lift lockdowns

Stimulus checks were suppose to give Americans some financial cushion as shutdowns linger on, but as May bills come due, over half of the nation hasn’t received a check.
Only 41% of U.S. adults say they’ve received a stimulus check, finds a Fortune-SurveyMonkey poll of 4,717 U.S. adults* between April. 25-28. Another 56% they have not received a check—which can be worth as much as $1,200 for individuals or $2,400 for married couples, plus $500 for each qualifying child.
On Friday the the Internal Revenue Service and Treasury Department announced it had issued 120 million stimulus checks, by both paper check and direct deposit. That was up from 87 million on April 17—but still well under the 170 million total checks it plans to send out. Much of the delay results from the Internal Revenue Service waiting longer to mail out paper checks to Americans without their checking information on file.
But even as the IRS gets out more checks, confusion remains.
The stimulus check program excluded dependents, undocumented immigrants, and individual filers with adjusted gross incomes above $99,000. But many Americans are still confused if they’ll get a check: A total of 11% of U.S. adults haven’t received a check and aren’t sure if they’re eligible.
Many U.S. adults who are unsure if they’ll get a check, have reported being unable to log in into the IRS’s Get My Payment portal (some reported success using this trick).
Only 1 in 5 adult Gen Zers have received their stimulus check, compared to just over 1 in 2 of Millennials. This divide is driven by the fact individuals who are claimed as dependents aren’t eligible for the check.
And Baby Boomers are less likely to say they’ve received their check compared to Millennials and Gen Xers. But many of these Baby Boomers, unlike ineligible Gen Zers, are simply waiting on their check. That delay make sense: Stimulus checks were delayed for those who receive Social Security benefits and railroad retirement benefits; those checks starting going out at the end of April.
Most Americans are using their check to pay non-housing bills (41%), buy groceries (33%), or household essentials (28%). Americans often use their income tax return on things like a new car or booking travel. But only 1% made travel plans with their stimulus check, and just 2% invested in stocks with the money.
But 25% are holding onto some of the money in savings—likely in case things take a turn for the worse.
*Methodology: The Fortune-SurveyMonkey poll was conducted among a national sample of 4,717 adults in the U.S. between April 25-28. This survey’s modeled error estimate is plus or minus 3 percentage points. The findings have been weighted for age, race, sex, education, and geography.
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fortune--2020-05-04--Andy Lack is out as head of NBC News amid leadership shakeup

Andy Lack is stepping down as head of NBCUniversal’s news operation as part of a shakeup of its TV business.
Lack is being replaced by Cesar Conde, who is now chairman of NBCUniversal News Group, including NBC, MSNBC and CNBC, the company said Monday. Conde had overseen NBCUniversal’s Spanish-language network, Telemundo.
The moves are part of a broader reorganization at the entertainment division of Comcast Corp. Under the new structure, NBC’s TV networks and new streaming service, Peacock, will be under Mark Lazarus, who continues to lead NBC’s sports broadcasting, among other responsibilities.
The changes mark the first big moves under new NBCUniversal Chief Executive Officer Jeff Shell, who said they represent a “more unified approach to our content strategy.” They also come as NBCUniversal considers job cuts at some divisions, including film and theme parks, which have been hit hard by the coronavirus.
During Lack’s tenure, NBC News faced criticism for how it handled harassment claims against former “Today” show host Matt Lauer and Ronan Farrow’s reporting for the network about disgraced Hollywood mogul Harvey Weinstein.
Lack, who previously ran Bloomberg’s media division, part of Bloomberg LP, has denied that NBC tried to cover up Lauer’s misconduct and has said Farrow’s story didn’t run because it didn’t have a witness or victim speaking on the record.
Our mission to help you navigate the new normal is fueled by subscribers. To enjoy unlimited access to our journalism, subscribe today.
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fortune--2020-05-04--Would you book a cruise for $28 a night? Carnival bets on budget travelers for planned August 1 rest

Would you book a cruise for $28 a night? Carnival bets on budget travelers for planned August 1 restart

Carnival Corp. plans to resume sailing on Aug. 1, becoming the first major cruise operator in the Americas to outline a return to operations after coronavirus outbreaks on several ships shuttered the industry.
The company’s flagship Carnival brand said Monday it will restart initially from Galveston, Texas, and Miami and Port Canaveral, Florida. Departures from other home ports in North America and Australia are canceled through Aug. 31, and other pauses will last even longer.
With several states starting to reopen their economies, the company is offering discounts of as little as $28 a day to get customers back. Still, many questions linger about the safety of cruising. When the industry shut down in mid-March, coronavirus outbreaks at sea wreaked havoc by trapping passengers, some of whom died, and placing demands on local health-care systems at a critical time in the pandemic.
“We will use this additional time to continue to engage experts, government officials and stakeholders on additional protocols and procedures to protect the health and safety of our guests, crew and the communities we serve,” the company said.
Read more: Carnival facing house panel probe
The cruise industry has historically used discounts to attract customers, but the extent of the sale shows the crisis of confidence Carnival is trying to overcome.
As of Monday, the company was offering five-day cruises from Galveston, to Cozumel, Mexico, in early August starting at $139, plus taxes, fees and port expenses. The base rate comes to about $28-a-day including food, cheaper than staying home for many people.
Turned Away
The industry stoppage in March came only after ports around the world started turning ships away in fear of the virus. Several vessels lingered at sea for weeks as they sought a place to dock.
Although most cruise companies — including Carnival — have portrayed the pause in operations as voluntary, President Donald Trump tweeted that he personally intervened.
The coronavirus swept the cruise industry broadly, but Carnival — the largest operator — had many of the earliest and most dramatic viral episodes at sea. The Diamond Princess, part of Carnival’s Princess Cruises brand, at one time had the biggest coronavirus outbreak outside of mainland China as it floated off Yokohama, Japan.
Compared with some other brands in the portfolio, Carnival Cruise Line has been relatively unscathed by the pandemic. Along with Princess, Holland America Line has been at the center of international crises tracked round-the-clock by the news media.
A “no-sail” order from the U.S. Centers for Disease Control and Prevention is due to expire on July 24 after a 100-day extension of the agency’s original edict.
Investors applauded the plan to restart. Carnival shares rose as much as 4.7% to $14.58 after the announcement. The stock was down 73% this year through last week.
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fortune--2020-05-04--How A.I. may help solve science’s ‘reproducibility’ crisis

Researchers often have trouble reproducing, or verifying, supposedly groundbreaking work described in scientific papers, raising questions about whether the findings in studies are genuine.
Over the past few years, they’ve been increasingly sounding alarms about this so-called reproducibility (or replication) crisis, concerned that scholars are routinely overstating their findings. The problem is particularly acute in the field of artificial intelligence, in which researchers have published a number of non-peer reviewed papers about topics like speech recognition and diagnosing medical conditions that others have been unable to replicate.
Now, a team from Northwestern University’s Kellogg School of Management and its Institute on Complex Systems has published a paper detailing a deep-learning system that it claims can figure out whether certain papers can be replicated or not. The paper, published Monday in the Proceedings of National Academy of Sciences of the United States of America journal, is noteworthy because it could help companies, universities, and other groups screen thousands of research papers while surfacing studies that are most likely to be reliable.
Brian Uzzi, a Kellogg School of Management professor and one of the paper’s authors, said his team wants to test the technology on the thousands of published coronavirus-related studies that scientists hope will lead to greater understanding about the virus. He’s concerned about a possible influx of low-quality coronavirus studies being rushed to publication.
“We want to begin to apply this to the COVID issue—an issue right now where a lot of things are becoming lax, and we need to build on a very strong foundation of prior work,” Uzzi said. “It’s unclear what prior work is going to be replicated or not and we don’t have time for replications.”
What’s unusual is that the Northwestern A.I. system doesn’t analyze the empirical or mathematical evidence that researchers typically detail in their papers to support their theses. Instead, it uses advances in natural-language processing to analyze the text of the paper, finding hidden clues in the writing that tips the software to flag that certain papers are more replicable than others.
Some of the paper’s ideas take from psychology research in the 1960’s that “found that people often reveal in the words they choose the level of confidence they have in what they’re saying,” Uzzi said. The same may apply to authors of scientific papers, who may unintentionally reveal their confidence in their findings through the language that they use.
For the paper, the researchers trained the software twice using two different data sets of academic papers. The researchers first trained the system on two million scientific abstracts so that it could discover patterns and relationships between words used in the academic papers. They then trained the system on academic papers taken from the “Reproducibility Project: Psychology,” an initiative by other researchers to manually recreate psychology papers to determine whether they could be confirmed.
When the researchers then tested their newly-trained A.I. system on hundreds of other papers taken from fields like economics and the social sciences, they found that the machine-learning model performed better than more traditional statistical techniques used to determine whether a paper’s findings could be reproduced.
Despite his technology’s promising results, however, Uzzi said his team is still unsure just what their A.I. system learned about the language of certain academic papers that make them more easily replicated. It’s part of a larger problem about the difficulties A.I. researchers have describing just how exactly neural networks reach their conclusions.
As a result, other researchers may be apprehensive about using the technology as a screening tool. Still, Uzzi is hopeful that the technology can eventually be used to help other researchers.
For future work, Uzzi said he would like to apply some of the natural-language processing techniques his team developed to analyzing corporate earnings calls. His team has already compiled the transcripts of 30,000 earnings calls as a dataset for the research project, which he hopes can help researchers understand “what it is about earnings calls that help us get more accurate predictions on what the company will do in the future.”
If the research is successful, it may be valuable for investors or analysts to use it as a financial forecasting tool.
“What we want to do us use the machine to help us predict whether the earnings call is going to lead to analysts giving a thumbs up or thumbs down to a company—like a buy or sell recommendation,” Uzzi said.
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fortune--2020-05-04--Unimpressed by online classes, college students seek refunds

They wanted the campus experience, but their colleges sent them home to learn online during the coronavirus pandemic. Now, students at more than 25 U.S. universities are filing lawsuits against their schools demanding partial refunds on tuition and campus fees, saying they’re not getting the caliber of education they were promised.
The suits reflect students’ growing frustration with online classes that schools scrambled to create as the coronavirus forced campuses across the nation to close last month. The suits say students should pay lower rates for the portion of the term that was offered online, arguing that the quality of instruction is far below the classroom experience.
Colleges, though, reject the idea that refunds are in order. Students are learning from the same professors who teach on campus, officials have said, and they’re still earning credits toward their degrees. Schools insist that, after being forced to close by their states, they’re still offering students a quality education.
Grainger Rickenbaker, a freshman who filed a class-action lawsuit against Drexel University in Philadelphia, said the online classes he’s been taking are poor substitutes for classroom learning. There’s little interaction with students or professors, he said, and some classes are being taught almost entirely through recorded videos, with no live lecture or discussion.
“You just feel a little bit diminished,” said Rickenbaker, 21, of Charleston, South Carolina. “It’s just not the same experience I would be getting if I was at the campus.”
Other students report similar experiences elsewhere. A complaint against the University of California, Berkeley, says some professors are simply uploading assignments, with no video instruction at all. A case against Vanderbilt University says class discussion has been stymied and the “quality and academic rigor of courses has significantly decreased.”
In a case against Purdue University, a senior engineering student said the closure has prevented him from finishing his senior project, building an airplane. “No online course can simulate the applicable, real-world experience” he hoped to gain from the project, the complaint says.
Class-action lawsuits demanding tuition refunds have been filed against at least 26 colleges, targeting prestigious private universities, including Brown, Columbia and Cornell, along with big public schools, including Michigan State, Purdue and the University of Colorado, Boulder.
Some of the suits draw attention to schools’ large financial reserves, saying colleges are unfairly withholding refunds even while they rest on endowments that often surpass $1 billion.
Several colleges declined to comment on the lawsuits, but some said students have continued to get what they paid for.
Ken McConnellogue, a spokesman for the University of Colorado, said it’s disappointing that people have been so quick to file lawsuits only weeks into the pandemic. He said the suits appear to be driven by a small number of “opportunistic” law firms.
“Our faculty have been working extremely hard to deliver an academic product that’s got the same high standards, high-quality academic rigor as what they would deliver in the classroom,” he said. “It’s different, no doubt. And it’s not ideal. We all would prefer to have students on our campuses, but at the same time, we’re in the middle of a global pandemic here.”
Officials at Michigan State said students are still taking classes taught by qualified faculty, and the school is still offering tutoring services, academic advising, faculty office hours and library services.
“We don’t negate that this has been a difficult time for our university, especially for our students,” Emily Guerrant, a Michigan State spokeswoman, said in a statement. The school has taken on new costs to move instruction online, she added, but “we have maintained our commitment to providing meaningful and robust learning experiences at no additional cost to our Spartans.”
Officials at Drexel University said the school has continued to provide a “broad spectrum of academic offerings and support” while students learn remotely.
Lawyers representing students, however, say the refunds are a matter of fairness.
“You cannot keep money for services and access if you aren’t actually providing it,” said Roy Willey, a lawyer for the Anastopoulo Law Firm in South Carolina, which is representing students in more than a dozen cases. “If we’re truly going to be all in this together, the universities have to tighten their belts and refund the money back to students and families who really need it.”
Willey said his office has received hundreds of inquiries from students looking to file suits, and his firm is looking into dozens of possible cases. Other firms taking on similar cases say they’re also seeing a wave of demand from students and parents who say they deserve refunds.
Along with tuition, the cases also seek refunds for fees that students paid to access gyms, libraries, labs and other buildings that are now closed. All told, the complaints seek refunds that could add up to several thousand dollars per student at some schools.
The lawsuits ask courts to answer a thorny question that has come to the fore as universities shift classes online: whether there’s a difference in value between online instruction and the traditional classroom. Proponents of online education say it can be just as effective, and universities say they’ve done everything they can to create rigorous online classes in a matter of weeks.
But some of the complaints maintain that the college experience is about more than course credits. They say there’s value to the personal interaction students get with faculty and classmates, both in the classroom and out. Willey adds that colleges themselves often charge lower rates for online classes, which he says is a reflection of their value.
“The tuition price speaks for itself,” he said. “These students decided to go to in-person, on-campus universities. They could have chosen to go to online colleges and earn their degree that way, but they didn’t.”
Even before the first lawsuits were filed, demands for tuition refunds had been spreading. Students at dozens of schools have started petitions calling for refunds as online classes left them underwhelmed. Scores of schools have returned portions of housing and dining fees, but few if any have agreed to return any share of tuition.
At the University of Chicago, hundreds of students signed a letter saying they will refuse to pay this term’s tuition, which was due April 29, unless the school reduces tuition by 50% and keeps it at that level during the crisis.
Colleges counter that the coronavirus has put them under sharp financial strain, too. Some estimate that they could lose up to $1 billion this year as they brace for downturns in student enrollment, state funding and research grants. Some have already announced layoffs and furloughs as they work to offset losses.
But the lawsuits say it’s not fair to pass those losses on to students. Jennifer Kraus-Czeisler, a lawyer for the New York firm Milberg Phillips Grossman, which is representing several students, said colleges have a duty to return fees for services they aren’t providing.
“We’re not disparaging the schools for closing. They did what was appropriate,” she said. “But they’re profiting at the expense of students. It just seems unconscionable.”


fortune--2020-05-04--Taika Waititi is officially directing a new ‘Star Wars’ movie

In news that has arrived just in time for May the Fourth, Oscar winner Taika Waititi will officially direct the next Star Wars movie. The move was confirmed by Lucasfilm on StarWars.com Monday following months of rumors.
Waititi, who won the Oscar for Best Adapted Screenplay (Jojo Rabbit) earlier this year, will direct and cowrite the film with Academy Award-nominated Krysty Wilson-Cairns (1917). No release date has been announced yet.
Lucasfilm also confirmed that Leslye Headland, the Emmy-nominated writer and cocreator of Netflix’s Russian Doll, is working on a new Star Wars series for Disney+ as a writer, executive producer, and showrunner. The series joins the streaming platform’s live-action hit The Mandalorian, as well as previously announced projects focusing on Cassian Andor and Obi-Wan Kenobi, as shows that take place in a galaxy far, far away.
Meanwhile, Waititi—who directed an episode of The Mandalorian— continues to keep busy with other projects, including more for the Marvel Cinematic Universe. Thor: Love and Thunder, the followup to Waititi’s Thor: Ragnarok, is now expected to hit theaters in February 2022, following delays caused by the coronavirus pandemic.
Our mission to help you navigate the new normal is fueled by subscribers. To enjoy unlimited access to our journalism, subscribe today.
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fortune--2020-05-04--Bankruptcy gives J.Crew a chance to reinvent itself (again)

The year 2020 started out promisingly enough for J.Crew, the apparel retailer that filed for Chapter 11 bankruptcy protection on Monday.
J.Crew Group finally found a new CEO in January in Jan Singer, a former executive at Nike and Victoria’s Secret, filling a corner office that had been empty for 14 months. Its namesake brand, once enormously successful but in decline for years, seemed to finally be stabilizing if not quite thriving. And there was appetite for the planned spin-off of Madewell, its smaller but booming sister brand, that would improve its finances.
But the mass store closings that the pandemic imposed on mall-based chains like J.Crew and Madewell pushed the highly indebted private-equity owned company over the edge financially.
The Chapter 11 filing, which calls for J.Crew to continue to operate as before, will remove the debt albatross from J.Crew Group’s neck by turning it into equity, and give the troubled but still beloved company something it really needs: a clean slate to reinvent itself after years of turmoil.
But that will be no small task. J.Crew the brand spent the last decade—long before the coronavirus showed up and eroded the brick-and-mortar retail industry—confusing shoppers with a grab-bag of aesthetics, garments of inconsistent quality, and a stale store experience.
J. Crew won hordes of loyal shoppers well into the 2010s by offering well-made staples like coats, pencil skirts, dresses, and suit jackets with just enough style, quirk, and flair to stand out from The Gap and other competitive chains. Jenna Lyons, J.Crew’s former creative director, helped turned the brand into one of the most popular fashion chains and became a style icon herself. It became a go-to brand for First Lady Michelle Obama during the previous White House administration. In 2011, J. Crew became the first mass brand to present at New York Fashion Week.
But that led J.Crew too far down the fashion road, with many items becoming seen as exorbitant, particularly in women’s wear: too pricey for its core customer, but not really high fashion, leaving J.Crew in the hazy space in between. One example: odd appliqués like real suede elbow patches on a cotton long-sleeved t-shirt or other touches that forced wearers to send a simple t-shirt out for dry cleaning.
By 2014, those cracks were starting to show in J.Crew’s business, and sales began to fall. J.Crew also missed big new trends like the rise of athleisure, the term for casual athletic clothing popularized by Lululemon Athletica. J.Crew was hit by many of the same pressures that buffeted rivals like Abercrombie & Fitch and The Gap, such as reduced shopper visits to malls, an abundance of choice in the market, and a shopper addiction to discounts. The rise of e-commerce, which requires a new approach to logistics, came on top of it all.
Reacting to the onslaught, J.Crew fell deep into the discounting trap and lost its Midas touch for knowing what customers wanted. Lyons departed in 2017. Mickey Drexler, the retail icon and “King of Cool” who was J.Crew CEO from 2003 to 2017, departed the company’s board last year. Meanwhile the brand continued to confuse customers by expanding its lower-price factory outlets and drumming up plans to sell merchandise on Amazon, which it later dropped. (The J.Crew band operates 170 outlet stores—almost as many as its regular stores, which total 182. There are 140 Madewell locations.)
Through it all, J.Crew has never resolved its key contradiction: positioning itself as quasi-luxury (it started selling some J.Crew and Madewell items at Nordstrom in 2016, but even those products are often on sale) while resorting to discounting tactics. Look no further than its men’s suit business for a case in point: Its high-quality Ludlow suits, some made in Italy and costing $1,000, for years were never discounted. Over the last year, the suits were frequently on sale or otherwise presented in a less thoughtful manner in stores.
Post-bankruptcy, J.Crew has an opportunity to clarify the chain’s point of view and underscore what the brand stands for in a sea of alternatives. The current economic environment will make that task exceedingly difficult. Consumers have stopped waiting to see what J.Crew will offer next; it must first stir the customer emotions that led the brand to its once-great heights.
“J.Crew’s products are not terrible in either quality or design. However, ranges are same-y and lack the embellishments and twists of more contemporary brands that would allow them to stand out,” says Neil Saunders, managing director of GlobalData Retail. “The consequence of this is that a growing number of shoppers see J. Crew as both boring and bad value for money and refuse to pay full price for garments.”
With J.Crew no longer the cultural touchstone it was only a few years ago, that perception will be ever harder to overcome. But at least it won’t be drowning in debt anymore.
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fortune--2020-05-04--Amazon executive quits to protest recent warehouse firings

A senior Amazon.com engineer has resigned in solidarity with fired corporate and warehouse workers who protested working conditions at the company.
Tim Bray, a vice president and veteran engineer with the company’s cloud-computing division, said in a post on his personal blog that he quit “in dismay at Amazon firing whistleblowers who were making noise about warehouse employees frightened of Covid-19.”
Bray, who worked in Vancouver, was a distinguished engineer, a coveted title large tech companies award to senior technologists. The decision will likely cost him more than $1 million in loss of salary and unvested Amazon stock, “not to mention the best job I ever had,” he said.
Amazon has been fighting the spread of coronavirus cases in its logistics network and a public-relations battle against critics who say the company hasn’t done enough to make warehouses safe. Small groups of workers at facilities around the U.S. have walked off the job in protest, and an employee activist group, Amazon Employees for Climate Justice, called for corporate employees to call in sick after two of its members were fired.
Amazon has said the workers were fired for violating corporate policy forbidding them from speaking publicly about internal matters. The company declined to comment on Bray’s resignation.
Bray, who last year signed the employee group’s open letter urging Amazon to do more to fight climate change, said he raised concerns about the firings internally. Having done that, he said, “remaining an Amazon VP would have meant, in effect, signing off on actions I despised. So I resigned.”
He said he believed both that Amazon was making massive investments to keep workers safe during the pandemic, and that workers who have spoken out have legitimate concerns. In the essay, Bray said the company was treating warehouse workers like “fungible units of pick-and-pack potential.” He chalked up some of what he sees as Amazon’s failings to its success in a capitalist system not set up incentivize good treatment of workers.
“Firing whistleblowers isn’t just a side-effect of macroeconomic forces, nor is it intrinsic to the function of free markets,” Bray wrote. “It’s evidence of a vein of toxicity running through the company culture. I choose neither to serve nor drink that poison.”
Bray, whose last day was Friday, said that Amazon Web Services, the division he worked for, treated workers humanely and “is by and large an ethical organization.”
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fortune--2020-05-04--Robinhood raises $280 million in push for global expansion

The popular stock-picking app Robinhood announced on Monday it raised a Series F funding round that will see the company valued at $8.3 billion. The $280 million cash infusion is being led by Sequoia Capital and comes at a time that Robinhood is seeing a spike of new customers and trading activity during the pandemic.
According to co-CEO Vlad Tenev, Robinhood has added 3 million funded accounts since the start of the year, while its daily trading volume for March was three times higher than its fourth quarter average.
“The purpose of the capital raise is to enable us to have flexibility and be strategic, and continue to invest in the platform,” said Tenev in an interview with Fortune. “We envision that over the next few years, Robinhood will expand globally and continue rolling out more products.”
The new funding round also comes after a series of tech failures in early March that saw Robinhood customers unable to trade for hours and, in one case, for an entire day. Tenev described the episodes as a “curveball” resulting from unexpected volume, and said Robinhood has since upgraded its tech capacity. He noted the company handled massive surges in trading in April without a problem.
The $280 million Series F round comes after the company raised $323 million last July, which then valued the company at $7.6 billion. The new $8.3 billion valuation figure accounts for the Series F investment.
Rumors of the new funding round were reported by Bloomberg and others in mid-April. According to unnamed sources cited at that time by the Financial Times, the terms of the new funding include provisions that would protect the investors’ stakes if Robinhood goes public or sells at a price below the Series F valuation. The company declined to comment on this matter.
Numerous financial publications predicted last year that Robinhood would launch an initial public offering in 2020. The company, founded in 2013, is especially popular with millennials for its mobile-first design, and its no-commission trading policy, which has recently been imitated by conventional brokerages.
But despite the buzz surrounding Robinhood, questions remain about how it will make money. A portion of its revenue comes from investing customers’ cash balances but, as Federal Reserve rates have dropped close to zero, the company may be hard-pressed to earn significant money on this front. Meanwhile, a report last year said over half or Robinhood’s revenue came from so-called “order flow,” a controversial practice where brokerages receive rebates kicked back from market makers and other third parties that execute their orders.
Tenev declined to comment on whether Robinhood is profitable, but said the company enjoys diversified revenue streams and predicted “solid growth” in the coming year. He pointed to the company’s $5 a month premium service known as Robinhood Gold as an additional income source, as well as money the company collects from stock lending and from fees from its customers’ debit card use.
Tenev also noted that Robinhood’s impending launch in the United Kingdom is off to a promising start, pointing to a waiting list of more than 150,000 customers who have signed up for the service. He also cited the recent unrolling of new products like fractional shares and a cash management account as evidence the company has overcome recent missteps.
The economic upheaval related to the coronavirus also appears to have benefited Robinhood in the form of an upsurge in trading and, according to Tenev, an opportunity to expand hiring. He also noted net deposits to Robinhood in March were 17 times its monthly average.
The latest funding round also brought contributions from previous and new investors, including NEA, Ribbit Capital, 9Yards Capital, and Unusual Ventures. This is the first Robinhood round led by Sequoia.
“We’re excited to further our relationship with Robinhood, which we believe is at the beginning of its opportunity,” said Andrew Reed, a partner at Sequoia in a statement.
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fortune--2020-05-04--Don Shula, legendary Miami Dolphins head coach, dies at 90

Don Shula, who set a standard for sustained excellence during a 33-year career as head coach of the Miami Dolphins and Baltimore Colts of the National Football League, has died. He was 90.
He died Monday at his home, the Dolphins announced on Twitter.
Victorious in two-thirds of the games he coached, Shula retired in 1995 with an NFL-record 328 regular-season wins, 10 more than George Halas, who coached the Chicago Bears for 40 years. Nineteen post-season wins — including victories in two Super Bowls — boosted Shula’s overall career mark to 347 wins, alongside 173 losses and 6 ties.
His achievements included guiding the only perfect season in NFL history, achieved by the Dolphins in 1972. He was elected to the Pro Football Hall of Fame in 1997, his first year of eligibility.
“Everybody bought into what he believed in, that winning attitude, and that’s why they were so successful for so long,” former Dolphins quarterback Dan Marino said of Shula in a 2013 ESPN program.
Bob Griese, who preceded Marino as quarterback and shared in Shula’s two Super Bowl victories, added, “Because he coached in different eras — in the 60s, the 70s, the 80s, and the 90s — he had his disciplines, and he had his rules and regulations, but he also adjusted to the athletes, what their talents and their personalities were.”
Learning Process
Shula played under head coach Paul Brown on the Cleveland Browns in the 1950s and embraced Brown’s classroom style of leading players.
“Paul believed that everything stemmed from learning,” Shula wrote in “The Winning Edge,” a 1973 book co-written by Lou Sahadi. “He said that you learn by seeing, hearing, writing, practicing and reviewing.”
Where Brown was “stand-offish and aloof with his players,” however, Shula said he aimed to be more approachable — “talking and joking a little instead of making everything so serious.”
Donald Francis Shula was born on Jan. 4, 1930, in Grand River, Ohio, the third of six children of Don and Mary Shula. His father, an immigrant from Hungary whose original family name was Sule, worked on a fishing boat.
Helping care for the triplets who were born after him was “my first coaching job,” Shula wrote in his memoir.
Ohio Upbringing
He played football in high school and at John Carroll University, a Jesuit college in University Heights, Ohio. He graduated in 1951 with a degree in philosophy.
A ninth-round draft pick in 1951, he played seven seasons in the NFL, mostly as a defensive back, for the Browns, Colts and Washington Redskins. He worked as an assistant coach at the University of Virginia and the University of Kentucky, then for three years as defensive backfield coach for the Detroit Lions.
The Colts named him head coach in 1963, when he was 33. With Johnny Unitas at quarterback, Shula led the team to seven consecutive winning seasons that all ended on a losing note, including in Super Bowl III against the New York Jets.
Joe Robbie, founding owner of the Dolphins, signed Shula before the 1970 season. Starting in 1971, Shula’s Dolphins made it to three consecutive Super Bowls, losing the first, to the Dallas Cowboys, then winning against the Redskins and Minnesota Vikings.
Perfect Season
The team’s perfect 1972 run — a 14-0 regular season, followed by wins in two playoff games and Super Bowl VII — stands as a singular NFL milestone.
When U.S. President Barack Obama in 2013 hosted the 1972 team at the White House — an annual honor extended to Super Bowl champions that was not yet established in the early 1970s — Shula presented him with a team jersey with the number 72 and the word “Undefeated.”
“It’s been 40 years, but what the hell, we still feel honored,” Shula said.
Super Bowl losses in 1983 and 1985 conspired to leave one blot on Shula’s resume — a 2-4 record in football’s biggest game. Though the Shula-led Dolphins thrived with Marino at quarterback starting in 1983, the pair never shared a title.
Shula retired following the 1995 season and helped run Shula’s Steak Houses, the restaurant chain he started in 1989. One of his sons, Dave Shula, was an assistant coach with the Dolphins and rose to head coach of the Cincinnati Bengals. Another son, Mike Shula, was head coach at the University of Alabama before becoming an offensive coordinator in the NFL.
In addition to his sons Shula had three daughters — Donna, Sharon and Anne — with the former Dorothy Bartish, whom he married in 1958. She died of breast cancer in 1991. In 1993, Shula married Mary Anne Stephens, ex-wife of Jackson T. “Jack” Stephens, former chief executive of Stephens Inc., a Little Rock-based investment banking company.
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fortune--2020-05-04--The reopening dilemma: Saving lives vs. saving the economy is a false tradeoff, economists say

Today, six U.S. states will allow business to resume, joining 21 others that have already begun lifting restrictions put in place to contain the coronavirus pandemic.
Internationally, Italy begins phase two of its reopening today and next week France will lift its strict social distancing rules and allow schools to resume. Politicians from these places have generally argued the economic cost of an ongoing lockdown outweighed the risk to lives that a resurgent epidemic might pose. Few louder than President Donald Trump who’s cautioned that “we can’t have the cure be worse” than the disease.
Elsewhere, though, politicians have made the exact opposite argument: When the British government extended its lockdown in late April, it said it was doing so not just to save lives, but to save livelihoods too: that extending the lockdown would reduce the chances of a second peak that would prove even more economically devastating. U.K. Prime Minister Boris Johnson has said he will only unveil a plan for a phased reopening the country’s economy later this week.
What the economists say
Which set of policymakers is right? So far, most economists who have modeled the costs of various policy responses to the Covid-19 pandemic side with the British: that an extended lockdown saves lives and is better for the economy in the long-run.
But, there’s a catch.
As always with economics, much depends on the assumptions built into the models. And some of these assumptions—about government’s ability to monitor infection rates accurately and about the behavior of workers and consumers—may be incorrect.
There’s also a vocal minority of economists who argue any lockdown is a mistake: it devastates the economy in exchange for very little benefit in terms of lives saved in the long-run. Moreover, they argue a more limited set of social distancing policies, such as those being pursued in Sweden, is closer to the ideal policy.
The debate stems in part from the fact that, given how unprecedented the situation is, there isn’t much established research on the economics of lockdown policies.
What the epidemiological models say
Emanuel Ornelas, a professor at the Sao Paolo School of Economics in Brazil, says most economists have only in the past six weeks started to learn about epidemiological models and how to incorporate them into their own economic forecasts.
The only similar event that has received any scrutiny from economists is the Spanish Flu pandemic, which began in 1918. One of the lessons of those studies is that timing is crucial: cities that imposed social distancing measures too late suffered economic pain, but saw little reduction in deaths.
Another lesson is that cities that lift social distancing measures early, almost always faced a second wave of infections, says Martin Eichenbaum, an economics professor at the Northwestern University in Evanston, Illinois. That’s because while lockdowns suppress the epidemic, they don’t usually reduce the infection rate to levels where it dies out completely. As soon as restrictions are lifted, infections climb rapidly again.
This second peak harms economic activity, even if containment measures are not reimposed, Eichenbaum says, both because more people become sick and die, but also because people become afraid to work and shop.
In a working paper Eichenbaum co-authored with fellow Northwestern economist Sergio Rebelo, and Mathias Trabandt, a professor at the Free University of Berlin, the researchers modeled various lockdown scenarios. In their research, an early end to containment policies initially brings about a big economic boost, driven by a 17% surge in consumption. But this boom also results in a jump in infections that soon plunges the economy into “a second, persistent recession.”
“Prematurely abandoning containment brings about a temporary rise in consumption but no long-lasting economic benefits,” the researchers write. In addition, “tragically, abandonment leads to a substantial rise in the total number of deaths caused by the epidemic.”
In Eichebaum’s most sophisticated model, for a country the size of the United States, lifting social distancing restrictions 12 weeks into an epidemic would cost 500,000 additional lives. Compare that to Eichenbaum’s more optimal policy decision: gradually ramping up containment measures as infections rise. At the peak, restrictions imposed would inflict some pain—most notably, by reducing consumer and business consumption by 76% at week 32—but then the impact would gradually ease as infections wane.
Eichenbaum says there is also another big problem with relaxing social distancing measures too soon. If infections come surging back, requiring that social distancing be reimposed, “trust in policymakers is eroded, and then you get an added recessionary effect because the public from then on refuses to trust the government that it is actually safe to go back to work.”
Another paper by researchers from Goethe University in Frankfurt, Vivantes Hospital in Berlin, and the University of California at Berkeley, comes to a similar conclusion. “A non-trivial outcome of our study is that strong suppression strategies lead to lower total costs…when containment efforts are not relaxed with falling infection rates,” the authors write. “A short-term control approach of softening containment with falling numbers of new cases is likely to lead to a prolonged endemic period.” In other words, the illness, and its attendant economic pain, will continue.
One key insight of this study was that the best overall results came when policymakers tried to reduce the overall number of cases across the entire span of the epidemic, rather than simply trying to drive down the current rate of infection below a certain threshold.
Eichenbaum’s research indicated that a gradual ramping up of restrictions, culminating in a very strict lockdown at the height of the infection, followed by a very gradual easing of restrictions, worked relatively well. But there was an even better policy, which he calls “smart containment.” This involves setting policies for different people based on infection status—those currently infected would need to be strictly quarantined, while those who have been infected, but recovered from the virus, are allowed to resume normal activities. This is similar to the “immunity passport” idea that the U.K. and Germany have reportedly toyed with.
Ornelas says the easing of restrictions should not apply to all industries equally. He says it is better to start with those sectors that have the biggest economic impact, for both consumption and employment, for a given geography to achieve the smallest possible health impact. In some places, this may be easier than others: for instance, a location where tourism is the most important industry—critical for both consumption and wages — will have a harder time reviving the economy than one dependent on the operation of a few large factories that might be able to resume operation with social distancing measures in place.
Eichenbaum says the idea of different rules for different industries makes economic sense but raises “ethical issues,” since it means citizens lucky enough to work in some sectors will be spared further financial pain, while others may be forced into bankruptcy.
The importance of testing
In all these models, the biggest assumptions are that government actually has a decent view of infection rates that it can use to calibrate the severity and duration of social distancing restrictions. But that requires extensive and accurate testing. This is especially important when so many infected people may be asymptomatic, as they seem to be with the coronavirus.
Unfortunately, that’s not the reality we live in. The U.S. and the U.K, as well as France and several other European countries, have struggled to put enough testing in place. Most countries don’t have the capability to conduct the sort of randomized testing that Eichenbaum says would provide policymakers with enough insights to set the least economic damaging policies.
Even countries with very strong testing regimes are struggling to achieve the kind of careful policy calibration that the economists assume is possible. Germany has one of the best testing regimes in the world, with the capacity to swab as many 800,000 people each week. Yet, after it began easing lockdown measures two weeks ago, allowing many small businesses to reopen, it found its reproduction number—a metric for the average number of other people each infected person passes the virus on to—shot back up, going from 0.7 to about 1, the point at which the epidemic begins to grow again. That has prompted the country to postpone plans to reopen schools.
The danger of lockdown policies
Given that lockdowns only suppress an epidemic and that the virus is likely to come roaring back once they are lifted, a few economists question whether strict restrictions are actually worth the economic damage they cause. Alexis Akira Toda, an economist at the University of California San Diego, is one of them. “People might think I’m crazy, but I am thinking through models and playing with these models and I always come to the same conclusion: that the current lockdown policies in most countries are probably wrong,” he says.
Toda says that, without a vaccine, the only way to end the epidemic is for enough people to become infected, recover and develop immunity that the transmission rate, the R, naturally drops below 1. The trick, Toda says, is to allow that to happen while shielding the people who are most likely to become severely ill—the elderly and those with pre-existing health conditions—and preventing the health system from being overwhelmed. This is similar to the herd immunity strategy that Sweden is pursuing and which the U.K. considered until new data showed its health system was unlikely to be able to cope with the case load.
To save the health system, Toda says, a strict lockdown might be necessary at some point during the epidemic, but he says to avoid needless damage to the economy, the most stringent lockdown should only be put in place when the epidemic is nearing its peak. He says in many parts of the world, including many U.S. states, lockdowns were put in place far too early.
Even more surprisingly, Toda says that many of the beneficial aspects of social distancing policies can be achieved with less damage to the economy by simply publicizing the level of infection in a given area.
In places with high infection rates, people will voluntarily stay home, avoid public transport and shun crowded bars and restaurants out of fear of catching the virus. Elsewhere, they will go to work as normal. That means economic activity won’t be as severely depressed as it is during mandatory lockdowns that cover entire regions, states or countries.
But again, this policy works best if there’s an effective testing regime, so government can publicize accurate infection rates for different areas.
All of the economists agree on one thing: except for very small countries, setting national policies probably doesn’t make sense. “It should be decided at more local level, with each city or region setting a policy based on the level of infection in that area,” Toda says.
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