Good morning. Good morning. Our DealBook Debrief call about the pandemic’s impact on retail, with The Times’s fashion director and chief fashion critic, Vanessa Friedman, is today at 11 a.m. Eastern. R.S.V.P. here to join, and be sure to read Vanessa and Sapna Maheshwari on the death of the department store. (Was this email forwarded to you? Sign up here.)
Deals come undone
The investment firm that agreed to buy Victoria’s Secret in February wants to back out, the highest-profile example to date of a buyer trying to unpick a deal because of the pandemic.
Sycamore Partners asked a Delaware court to let it walk away. Its reason: The seller, L Brands, had furloughed most Victoria’s Secret employees, cut executive salaries and missed April rent payments. That veered from the “ordinary course” of business required in the takeover agreement.
• Though the pandemic “is an international tragedy and health emergency,” says Stefan Kaluzny, Sycamore’s founder and C.E.O., “we are equally certain that it does not excuse the performance of L Brands’ obligations.”
Investors expect Sycamore to escape, with shares in L Brands plunging as much as 20 percent. The Bernstein research analyst Jamie Merriman wrote yesterday that the chances of the Victoria’s Secret deal closing were low.
• There’s plenty to test in court, however. Delaware law generally requires a target company to make “reasonable best efforts” to operate in its ordinary way as it waits for an agreement to become final. But what is “ordinary” anymore? That fight could get ugly.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut and Michael J. de la Merced and Jason Karaian in London.
Here we go again
It has become a grim Thursday ritual: waiting for the latest weekly data on initial unemployment claims to reveal how many million Americans just lost their jobs.
Analysts expect a figure of 4.5 million for the week ending April 18. Over the previous four weeks, some 22 million people filed their first jobless claim, the equivalent of the entire labor force in New York, New Jersey, Connecticut and Pennsylvania. (Today’s forecast would add Virginia.)
The impact will last. Needless to say, the newly unemployed cut their spending. But research by academics found that when a 12-month high in unemployment is announced in a metro area, everyone there spends less, for months.
Bezos is back at the wheel
Jeff Bezos has been Amazon’s C.E.O. since he founded the company in 1994. In recent years, though, he has stepped back from day-to-day management to focus on “fun, futuristic bets,” writes Karen Weise of The Times. Since the coronavirus outbreak, he’s resumed a more active role.
It hasn’t always been smooth sailing, with Amazon struggling to respond to coronavirus in its work force. Fewer workers showing up made dealing with a surge in demand difficult.
• Still, Amazon is one of the few firms to benefit financially from the crisis. Record highs for its stock have made Mr. Bezos some $25 billion richer over the past month or so.
Based at his ranch in West Texas, Mr. Bezos is holding frequent calls with executives to make detailed decisions on inventory, as Karen writes:
Mr. Bezos and the other executives soon approved plans to stop accepting low-priority items into warehouses and to delay customer shipments of other items that Amazon considered low demand, according to three people briefed on the changes.
Mr. Bezos helped decide which features to remove from the Amazon website to reduce customer demand, such as burying its popular page promoting daily deals, one of the people said. He also approved delaying Prime Day, the company’s summer shopping extravaganza.
“My list of worries right now — like yours I’m sure — is long,” Mr. Bezos wrote to employees last month. Virus tests are one focus: He has spoken with officials like Gov. Jay Inslee of Washington about how Amazon could help ramp up testing quickly. The Amazon chief holds daily calls with an internal testing team, which is building a lab.
For the first time in years, Mr. Bezos visited an Amazon warehouse. It was one near Dallas, earlier this month, Karen writes:
Afterward, he asked other executives why masks, which the company had finally obtained, weren’t being required, according to a person involved in the response.
A few days later, Amazon told its warehouse workers that they had to wear masks.
The velvet rope in banks’ rescue loans
Many applicants to the federal small business rescue program faced daunting technological hurdles and a mad rush for the money. But not big banks’ wealthiest clients, Emily Flitter and Stacy Cowley of The Times report.
Private bank clients got “concierge treatment” at firms like Citigroup and JPMorgan Chase, like letting their banker submit their paperwork on their behalf and avoiding buggy online portals. That’s in addition to commercial-banking clients, like the national sandwich chain Potbelly, which got a leg up on applying.
• Nearly all of the 8,500 commercial and private banking clients of JPMorgan who applied got a loan. Of the over 300,000 small-business clients who applied through its retail bank, only 18,000 did.
• The biggest loan recipient is a Dallas hotelier whose companies, which run properties like the Marriott Beverly Hills and the Ritz Carlton in Atlanta, are set to receive $59 million. Another noteworthy beneficiary is Nikola Motor, the electric car company founded by the billionaire Trevor Milton that’s preparing to go public at a $3 billion valuation, which got a $4 million loan.
“It’s not fair that this is about who has the best connection with their banker,” Marc Morial, the C.E.O. of the National Urban League, told our colleagues.
Small businesses will do better next time, banks say. About $60 billion of the $320 billion that Congress is expected to add to the rescue fund is earmarked for small banks and community-focused lenders, which reach more mom-and-pop firms.
C.E.O.s: They’re just like us
Many of us have awkward home setups for videoconference calls during the pandemic. Reed Hastings of Netflix is apparently no exception.
Mr. Hastings joined his latest earnings call from his house, creating what Recode’s Rani Molla called “the weirdest reboot of MTV Cribs.” Some joked that the backdrop looked like it could be on a yacht or in a bunker. (Disappointingly, the ultimate arbiter of on-air decor, @ratemyskyperoom, has not yet weighed in.)
Have you artfully rearranged the room where you take video calls, or just left things as they are? Let us know at [email protected].
The speed read
• Investors withdrew $33 billion from hedge funds in the first three months of 2020, the biggest quarterly outflow since 2009. (FT)
• The venture capitalist Bill Gurley, one of Silicon Valley’s top investors, won’t play an active role in Benchmark’s latest fund. (WSJ)
Politics and policy
• Treasury Secretary Steven Mnuchin promised to “spend what it takes” to beat back the coronavirus, whatever debt that incurs. (WSJ)
• Senator Mitch McConnell, the majority leader, said states should be allowed to declare bankruptcy instead of receiving more federal aid. (NYT)
Best of the rest
• Fox is cutting executive pay. Rupert and Lachlan Murdoch will forgo their salaries through September. (NYT)
Thanks for reading! We’ll see you tomorrow.
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