The slow start of the implementation of the Covid-19 vaccine, along with the arrival of new virus variants, have dashed hopes of some business leaders to return to normal in 2021.
Consumers are unlikely to resume travel, dining and shopping in stores with a pre-pandemic rate until later this year, the heads of some large companies told Wall Street analysts and investors in recent years. weeks. Some CEOs said consumer activity could resume as soon as spring. Others pointed to a recovery later in the year, or even 2022.
“Let me stress that progress in economic growth depends on an effective global vaccine deployment program,” said David Solomon, CEO of Goldman Sachs Group Inc. “In its absence, the economic recovery will be unnecessarily delayed.”
The pandemic has strengthened and derailed growth prospects unequally; the staff divided into staff able to take care of themselves at home and those who have to be personally informed of the duty; and reformed consumer buying as home orders change. Rapid changes have complicated financial forecasts and made it difficult to predict consumer behavior.
Some CEOs say it is unlikely that consumers will resume food and shopping at pre-pandemic levels by the end of this year.
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Gene J. Puskar / Associated Press
John Idol, CEO of Capri Holdings Ltd., which owns Versace and Michael Kors, said online luxury spending is strong, but the short-term outlook is questionable because the jumps in Covid-19 cases have caused additional restrictions and temporary store closures.
As for tourism, which drives much of the luxury sales, Idol does not expect crowds of traveling shoppers in its brand stores until May 2022. “We don’t believe the vaccine is fully distributed in a way based on creating comfortable cross-border traffic until next year, ”he said.
The airline trading group warned that the recovery could be lower than expected in 2021 after demand collapsed by about two-thirds in 2020. Reserves in January 2021 fell 70% from One year ago.
“The optimism that the arrival and initial distribution of vaccines would lead to a rapid and orderly restoration in world air travel has been nullified in the face of new outbreaks and new mutations in the disease,” he said. Alexandre de Juniac, General Manager of International Air Transport Association. “The world is more closed today than at virtually any time in the last twelve months.”
Bernard Looney, chief executive of BP PLC, said the pandemic is likely to continue to weigh on the oil and gas giant earlier this year and that the degree to which energy demand is recovering will depend in part on deployment and the effectiveness of vaccines.
About 8.7% of the U.S. population had received a dose of Covid-19 vaccine on Feb. 6 and the road to herd immunity is long.
Infectious disease specialists estimate that stopping the spread of Covid-19 and its mutations would require more than 70% of the population to develop immunity. A survey by the U.S. Census Bureau of 68,000 adults in the United States from January 6 to 18 showed that only about half of unvaccinated adults said they would definitely get the vaccine.
Business profits have rebounded rapidly after the initial pandemic shocks and investors have pushed major market averages to new highs in optimism over next year. After falling an estimated 12.5% in 2020, the profits of the S&P 500 companies are expected to increase by 23.6% this year, according to data from Refinitiv.
More than 120 U.S. CEOs surveyed by a nonpartisan think tank The Conference Board, between early November and early December, said Covid-19 was its main concern and potential trade disorganization in 2021. After this, they said, the availability of vaccines could have the biggest impact on their businesses.
Rick Gates, senior vice president of pharmacy and healthcare at Walgreens Boots Alliance Inc., said in an interview that the company expects to return to normal as the vaccine is distributed, but much will depend on how long the immunity lasts. The company is concerned that Covid-19 may turn out to be a more permanent element of life, a serious and deadly disease that will require annual vaccinations, he said.
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Problems with vaccine distribution in other countries could also derail American companies. Canada, which does not manufacture its own Covid-19 vaccine, recently extended the ban on large cruises one more year, until February 28, 2022. Corp.
and other operators have canceled their cruises until April 30, but have spoken of resuming trips to the United States this year.
Arnold Donald, CEO of Carnival, said in January that the company is working to return all of its ships to service by the end of 2021, thanks to the development of low-cost testing and new therapeutics. “The pace of vaccine distribution will certainly influence the pace of our recovery,” he said.
While the first few months of 2021 are likely to be a challenge in terms of continued blockades and restrictions, many executives said they expect enough people to be vaccinated in the spring to boost consumer confidence.
T-Mobile U.S. Inc. chief Mike Sievert said he believes it is wrong to assume the launch in the United States will not accelerate. “I think by the middle of the year we will see widespread vaccination,” he said. Wider vaccination could benefit your business if it translates into more consumer activity and more than the rival company would spend, he said.
Some followers of business sentiment suggest that leaders are optimistic. The corporate sentiment of S&P 500 companies that has so far reported results rose to an all-time high from the recent low of three-quarters of a year ago, according to a Bank of America predictive analytics report. The analysis assigns sentiment scores to earnings call transcripts.
Delta Air Lines Inc. chief Ed Bastian said he expects a turning point this spring as vaccine distribution continues, consumer confidence grows and travel restrictions increase. Other executives echoed that view, telling investors that as more people get vaccinated they will venture to travel in the summer.
Stephen Cooper, chief executive of Warner Music Group Corp., told analysts that as the company expects clarity on the effectiveness of vaccines in new strains, it will continue to drive live streaming about in-person concerts. He said the music company hoped the live shows could resume “sooner rather than later.”
—Sharon Terlep and Suzanne Kapner contributed to this article.
Write to Sarah Krouse to [email protected]
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