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Essential? Retailers Like Guitar Center and Michaels Think They Are

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At some Guitar Center stores, employees are still allowing customers to try out models of guitars. Dillard’s, a department store chain popular in the South, is still welcoming shoppers looking for clothing and makeup. And Michaels, the arts and crafts chain, says it is keeping many of its stores open to provide supplies to parents teaching their homebound children. “We are here for the makers,” the retailer said in an email to one concerned customer.

In states hit hard by the coronavirus, like New York and California, governors and mayors have mandated the closure of all but the obviously essential stores, like supermarkets and pharmacies. And the Department of Homeland Security has laid out guidelines for businesses across the country to follow when deciding whether to stay open, even in regions not known to be hot spots for the virus. The agency is careful to note that its definition of a “critical” work force is not an official standard, leaving it up to corporations to decide for themselves.

Given this latitude, retailers have kept thousands of stores open, even as health experts warn that the virus is likely to spread more widely across the country in the coming weeks. Several retailers — like Sears, Kmart, and Joann Fabric and Craft Stores — have provided employees with letters they can share, arguing that their businesses are essential.

That some retail stores are staying open while other businesses have closed reflects the piecemeal approach to combating the pandemic in the United States. There are emergency orders limiting business to essential retailers in about half the country, but much of the South and West has no such government restrictions.

The Retail Industry Leaders Association has asked the federal government for clearer guidelines.

The decisions have left many retail employees with reservations about showing up for work, where they often don’t have masks, gloves or hand sanitizers, and with questions about their stores’ cleaning procedures.

Some corporate leaders may see little choice but to keep operating. Guitar Center and Joann, for example, had relatively high levels of debt heading into the health crisis, credit analysts say. Closing for the next few months, while burning through cash to make debt payments, could be especially painful. But each company is taking a different approach. Guitar Center has closed 75 percent of its stores, while Joann has closed fewer than 10 percent.

Sears, which emerged from bankruptcy protection last year and had been closing dozens of stores heading into this winter, has decided to stay open to provide “essential products and services during this crisis,” such as appliances, a company executive said in a statement. The retailer is also seeing an “increased interest in fitness equipment and entertainment to keep kids busy.”

Some retailers say preserving jobs and sales is also a worthwhile goal — a sentiment shared by President Trump, who said on Tuesday that he wanted the shutdowns to lift by April 12.

Wade Miquelon, the chief executive of Joann, said in an interview, “When we’re talking about unemployment rates that could be at epic proportions, I hope we can look back and say, ‘We’re not perfect, but we did the best we could and maybe did the right thing.’”

At Guitar Center in recent days, customers have been trying out guitars, then putting them back on the shelves after touching them, said two employees at two stores in different states, who spoke on the condition of anonymity because they were not authorized to speak publicly.

A spokeswoman for Guitar Center said the company had “increased the frequency of store cleanings, with particular focus on instruments and in interactive areas.”

Joann has closed about 70 of its 860 stores, leaving some employees concerned about their and customers’ health. An Ohio store manager who spoke on the condition of anonymity because of worries over job security said that location was out of cleaning supplies that are effective for proper disinfecting, and that staff members were hesitant to take a 30-day leave of absence because it would be largely unpaid.

The company said that it was shipping more cleaning supplies to stores this week and that, in the interim, employees could buy “approved supplies” and would be reimbursed.

Mr. Miquelon said that the definition of essential varied by states and municipalities, but that Joann counted under “several categories.”

The company provides products for small businesses like those on Etsy and has been promoting material that volunteers can make into masks and gowns for health care providers, he said. The health care efforts were outlined Friday in a release, which also advertised temporary sewing stations at stores.

“What we’re doing now is akin to some of the wartime efforts,” Mr. Miquelon said.

More than half of Joann stores are restricted to curbside pickups and shipping from stores. But Mr. Miquelon noted that e-commerce orders could take four to five days and said he did not intend to follow electronics retailers like Best Buy and GameStop in limiting all shopping to curbside pickups.

Joann, based in Hudson, Ohio, was looking at new protections like masks and gloves for its store employees, and protocols for social distancing at cash registers, he said.

“I get employees have anxiety now, but we’re not making anybody work,” Mr. Miquelon said. “We are trying to do everything we can to help customers, help the supply chain, keep people safe and make sure people have a job and food on the table when this thing is over.”

Joann, which employs about 22,000 in its stores, has granted more than 500 leave-of-absence requests, a spokeswoman said on Tuesday. Closed stores are paying typical wages to affected employees for the next two weeks, she said.

A letter from Joann management given to employees to share described the chain’s “Essential Business Activities” as a supplier to home-based businesses and health care professionals. The letters for Sears and Kmart employees says that “essential businesses including hardware stores are permitted to stay open,” and that staff are therefore exempt from emergency closure orders.

RH, the high-end furniture chain formerly known as Restoration Hardware, is still operating a busy call center in Tracy, Calif., known internally as a “Delight Center,” even after closing its stores, said an employee who spoke on the condition of anonymity to protect their job. Employees who have asked to work from home were told that it was too costly and difficult to set up. After an employee was stopped on the way to the center by law enforcement and told to go home, the company gave employees a letter to show the police in the future, the person said.

The letter, which was shared with The New York Times, said RH employees were subject to Gov. Gavin Newsom’s “exception for individuals who were needed to work in order to maintain continuity of operations of the federal critical infrastructure sectors.”

RH said in a statement that its call center was a “critical” part of the company’s business. The company added that it was taking precautions by spacing out workers in cubicles. And if the employees are worried about going to work, they can stay home and use paid time off, the company said. Or they can opt not to take paid time off but still receive benefits.

The debate over keeping stores open has spilled onto social media. Joann’s recently deleted comments on its Instagram account and disabled further posts. An Instagram post from Michaels on Tuesday that shared a “Boredom buster idea!” led to responses like: “Protect your employees. Close your stores.”



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Market for Chinese-made masks is a madhouse, says broker | World news

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The scramble for face masks has created a “madhouse” atmosphere among Chinese manufacturers, who are making huge profits as customers around the world fight to be the first in line.

Producers of masks and respirators are demanding to be paid in full before the products leave their factories and are supplying whoever can pay the most and pay fastest, according to Michael Crotty, a textile broker based in Shanghai.

Crotty, of Golden Pacific Fashion and Design, said he had spent all of Sunday dealing with a flood of new enquiries from US states, national governments, cities, hospitals, distributors and private companies seeking to protect their employees.

“It’s just a madhouse,” he said. “Money talks. The factory knows one thing: what’s in my bank account and when did it get there? And if it gets there before the other guy then that’s who is going to get the production time.”

Factories that have quickly changed their production lines to make masks are demanding 50% payment when an order is made and the other 50% before the masks leave the factory. With scams proliferating, those are often unacceptable terms to many buyers, especially those spending taxpayers’ money.

“The factory doesn’t care,” Crotty said. “They’re getting orders from people they’ve never heard of before. It’s a really unusual circumstance to have these factories absolutely in the driver’s seat. And they’re in the driving seat not of a Volkswagen but of a Mercedes limousine.”

Wearing masks has long been common in parts of Asia to combat air pollution and the spread of disease, but until now was rare in Europe and the US.

The masks on the market range from thin cotton coverings to fine-mesh surgical masks and respirators that form a seal over the mouth and nose and have to conform to strict specifications.

Some European countries are weighing up whether to advise the public to wear masks when not at home. Last week the CDC in the US issued guidance recommending wearing a mask in public spaces. Trump has shrugged off the advice so far, saying: “This is voluntary. I don’t think I’m going to be doing it.”

French and German officials blamed the US last week for using “wild west” tactics to outbid them, but Crotty said the outbidding appeared to be an all-against-all affair.

Over the weekend authorities in Berlin withdrew a claim that the US had “seized” a shipment of 200,000 respirator masks ordered for the city’s police force, a claim that led to an accusation of “modern piracy” from Berlin’s state interior minister, Andreas Geisel.

According to Der Tagesspiegel newspaper, the police now say they were outbid while the respirators were in transit at Bangkok airport. The Berlin authorities say it is unclear where they went and who the ultimate buyer was.

Der Tagesspiegel reported that the masks were made by the US manufacturer 3M, but it has denied any involvement in the transaction.


The company has come under intense public pressure from Trump in recent days for continuing to supply masks to other countries. On Thursday he invoked the Federal Production Act, which dates back to the Korean war era and has given the administration the right to use “any and all authority” to procure the protective equipment it needs.

“We need the masks. We don’t want other people getting it,” Trump said in a Saturday briefing to reporters. “That’s why we’re instituting [the] defence production act. You could call it retaliation because that’s what it is: it’s a retaliation. If people don’t give us what we need for our people, we’re going to be very tough.”

3M issued a statement on Friday saying that cutting off supplies of protective equipment to Canada and Latin America could cause a humanitarian crisis, but Trump stepped up his attacks on the company over the weekend.

“The people that have dealt with them, have dealt successfully with many companies over the last month, And they don’t like the way 3M has treated our country. They don’t frankly like the representatives of 3M,” he said.

Last week the US authorised the importation of respirator masks from China made to a Chinese standard that is close to US specifications for the N95, which filters at least 95% of particles that are 0.3 microns or larger. (The European equivalent is the FFP2 respirator.)

At the same time, stung by widespread reports of shoddy masks imported from China, Beijing took action to regulate producers. However, Crotty said the effect of the regulation has been to cut off supply. Beijing is only giving certification to companies that have previously sold on the Chinese domestic market, but Crotty said four-fifth of the factories he dealt with manufacture solely for the export market.

“Only 20% might have these certificates, so of course they’re going to raise prices higher,” he said. But he added that masks without certification could still be exported if they were labelled for personal or commercial use only.

Crotty said everyone involved in the market was trying to improvise in unique circumstances. “None of us have ever seen anything like this. The reaction to the pandemic in the US was not very well prepared. So I think hopefully there’ll be big lessons learned through all of this, when this tapers off.”



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Fewer deaths in Veneto offer clues for fight against virus

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When, at the end of February, Lombardy and Veneto recorded Italy’s first local cases of transmission of coronavirus, the two regions quickly erected road blocks, establishing Europe’s first lockdown and a precedent for the rest of the continent. 

Since then the fortunes of the two wealthy neighbours, which have some of the best-resourced health systems in Europe, have diverged.

Struck by a human catastrophe unseen in Europe outside of war, with military trucks taking away corpses from the city of Bergamo, Lombardy has a death rate of 17.6 per cent.

Nearby Veneto’s stands at 5.6 per cent. While virologists caution that the percentage death rate is closely tied to the level of testing, they also attribute the gap to other factors, such as Veneto’s reluctance to hospitalise compared with its neighbour. 

“Veneto has a very low mortality compared to the rest of Italy,” said Professor Andrea Crisanti, a leading virologist from the University of Padua, in charge of a mass testing programme across Veneto. “This shows that our approach has worked well so far.”

As of Saturday Lombardy, which has a population of 10m people, accounts for 8,656, or 56.3 per cent, of Italy’s total declared deaths from the virus of 15,362. Meanwhile Veneto, which has a population of 4.9m, has suffered 607 official deaths out of 10,824 diagnosed cases. 

Higher levels of testing and tracing in Veneto is the most widely cited explanation for why the region has managed to control its outbreak more effectively than its neighbours. 

Editor’s note

The Financial Times is making key coronavirus coverage free to read to help everyone stay informed. Find the latest here.

Luca Zaia, governor of Veneto, was the first regional head in Italy to devise a widespread testing programme that involves drive-through swabs done in cars as well as tests in medical centres.

This went beyond World Health Organization guidance, which advises to test and trace suspected cases. On the advice of the region’s scientists, Veneto has to date conducted 133,289 tests as of Saturday, the second-highest in Italy after the 141,877 of Lombardy in spite of having half of its population.

Yet experts say testing is not the only reason for the lower death rate.

Venetian doctors also cite the region’s expertise in infectious disease, something they trace back to its pioneering history dealing with viruses arriving in its port from the east. The word quarantine derives from quarantena, the Venetian word for “40 days”, or the amount of time ships arriving from plague-ridden destinations were isolated.

For Giorgio Palù, one of Europe’s leading virologists, and scientific adviser to the governor of Veneto, a critical factor has been the number of diagnosed patients taken into hospital.

The number of diagnosed patients who were taken in hospitals for clinical treatment at the start of the outbreak was about 65 per cent in Lombardy, Prof Palù said.

This compares with 20 per cent in Veneto, where the majority were told to stay at home unless urgent care was required.

“There were different instructions given to the sick by the different regional health authorities,” he said. “Yes, there has been more testing in Veneto but people were kept at home and not taken into hospitals. The more patients you admit to the hospital, the more cases you get. You create the outbreak as at the start nobody was taking care of sampling the doctors or nurses, [so] you were taking home the infection.”

His observation comes as more than 60 Italian doctors and health workers have died, the majority of these in Lombardy. A group of doctors from the Papa Giovanni XXIII hospital in Bergamo warned last month that hospitals had become the main source of transmission of Covid-19 infections, and urged more patients to be treated at home.

Doctors and nurses on the frontline of the fight against coronavirus in Rome, Bergamo and Brescia
Doctors and nurses on the frontline of the fight against coronavirus in Rome, Bergamo and Brescia © Domenico Stinellis/Antonio Calanni/Luca Bruno/AP

“We are learning that hospitals might be the main Covid-19 carriers,” they wrote in the New England Journal of Medicine. “They are rapidly populated by infected patients, facilitating transmission to uninfected patients.”

The Veneto region has a large network of smaller health centres, which have been used to diagnose and treat patients in ways that have kept them out of large hospitals, said Prof Palù.

The fact that Lombardy has a greater proportion of private hospitals than Veneto also contributed to more Covid-19 patients ending up in hospitals, he argued. The Lombardy administration was also under political pressure, Prof Palù added. 

“In Lombardy there were too many admissions from the primary side, where the triage was done. The Italian prime minister at the start criticised the hospitals in Lombardy, and it seems they responded by wanting to show they were treating people, not telling them to stay at home.”

Officials in Lombardy also said Rome should have done more. “I put my mask on on the television, and they insulted me and told me that I undermined Italy’s credibility,” said Lombardy’s governor Attilio Fontana this week. “Perhaps I should have been tougher in opposing the [central] government.” Late last month, Lombardy established teams of medics to monitor at home patients who had been discharged from hospital. 

The mood in both regions is still sombre. “Have we committed errors? Of course we have,” said Giulio Gallera, Lombardy’s head of welfare last week. “We have always given our best to offer the many people who arrived in our hospitals the necessary care . . . we have done the best we could.”



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U.S. banking group warns of ‘massive’ delays, tech issues with small-business rescue program

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WASHINGTON (Reuters) – Hundreds of U.S. lenders are struggling to access the technology system for distributing $349 billion of government rescue loans, while the pot of money is insufficient and will soon be expended, a top banking group warned over the weekend.

Congress last month created the unprecedented program as part of a $2 trillion stimulus package to help businesses which have either shut down or have been dramatically curtailed by the coronavirus pandemic. Borrowers could apply for the loans via participating banks from Friday until June 30.

The program is being jointly administered by the U.S. Treasury Department and the Small Business Administration (SBA).

“Community bankers are frustrated with failed technology links and portals. Even those banks with access to the (SBA) system have shared their experiences of significant challenges with user access and latency in application processing,” the Independent Community Bankers of America (ICBA) wrote in a letter to the Treasury and SBA on Saturday evening.

The powerful lobby group, which represents thousands of small banks, added that lenders are “experiencing massive delays and (an) inability to process loans or even access the SBA.”

The Treasury and the SBA did not immediately respond to requests for comment on Sunday, although Treasury Secretary Steven Mnuchin has said the agencies are working hard to fix issues with the program.

“Funding of $349 billion is frankly inadequate for the magnitude of need in the American small business community and is likely to run out quickly,” the ICBA continued, warning that the largest U.S. lenders would quickly suck up the majority of funds, leaving community bank customers with nothing.

The group called for the government to allocate at least 25% of the existing and future funds for banks of $50 billion in assets or less, in line with their share of industry assets.

It also said the government should address an “urgent need for liquidity” by purchasing loans made through the program, allowing small banks to free up their balance sheets and continue lending.

“This program should not be limited by the balance sheet capacity of participating lenders,” the group added.

Reporting by Michelle Price; Editing by Daniel Wallis

Our Standards:The Thomson Reuters Trust Principles.



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