Slow deployment of Covid-19 vaccine modifies some business plans

“Let me stress that progress in economic growth depends on an effective vaccine deployment program globally,” said David Solomon, CEO of Goldman Sachs Group Inc. “In his absence, the economic recovery will be delayed unnecessarily. ”

The pandemic has unevenly supported and derailed growth prospects; distributed staff between staff able to shelter at home and those who must report to work in person; and reorganized consumer purchases as home orders evolve. Rapid changes have complicated financial forecasting and made consumer behavior difficult to predict.

John Idol, CEO of Capri Holdings Ltd., which owns Versace and Michael Kors, said luxury spending online is strong, but short-term prospects are in question as jumps in Covid-19 cases resulted in additional restrictions and temporary store closures.

As for tourism, which generates a large chunk of luxury sales, Idol doesn’t expect crowds of itinerant shoppers to return to his brands’ stores until May 2022. “We don’t think so that the vaccine be fully distributed in a fairly well-founded way to create comfortable cross-border traffic until next year, ”he said.

The airline industry trade group warned that a recovery could be weaker than expected in 2021 after demand plummets by about two-thirds in 2020. Bookings in January 2021 were down 70% from to a year ago.

“The optimism that the arrival and initial distribution of vaccines would lead to a swift and orderly restoration of global air transport has been dashed in the face of further outbreaks and mutations of the disease,” said Alexandre de Juniac, CEO international air transport. Association. “The world is more locked down today than at virtually any time in the past 12 months.”

Bernard Looney, managing director of BP PLC, said the pandemic is likely to continue to weigh on the oil and gas giant early this year and that the degree of recovery in energy demand will depend in part on deployment and vaccine efficacy.

About 8.7% of the American population had received a dose of a Covid-19 vaccine as of February 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 Census Bureau survey of 68,000 adults in the United States, conducted Jan. 6-18, found that only about half of unvaccinated adults said they would definitely receive the vaccine.

Corporate profits rebounded quickly from the initial shocks of the pandemic, and investors pushed major market averages to new highs on optimism for the coming year. After falling about 12.5% ​​in 2020, profits of companies in the S&P 500 are expected to rise 23.6% this year, according to data from Refinitiv.

More than 120 U.S. CEOs interviewed by a non-partisan think tank, the Conference Board, between early November and early December said Covid-19 was their main concern and potential business disruptor in 2021. After that, they said that vaccine availability could have the greatest impact on their business.

Rick Gates, senior vice president of pharmacy and healthcare at Walgreens Boots Alliance Inc., said in an interview that the company expects a return to normal as the vaccine rolls out, but much will depend on the duration of the immunity. Society is concerned that Covid-19 will become a more permanent feature of life, a serious and fatal flu illness that will require annual vaccines, he said.

Problems distributing vaccines in other countries could also derail American companies. Canada, which does not manufacture its own Covid-19 vaccine, recently extended its ban on large cruise ships for an additional year, until February 28, 2022. Carnival Corp.

and other operators canceled their crossings until April 30 but have talked about restarting travel to the United States this year.

Arnold Donald, CEO of Carnival, said in January that the company is working to get all of its ships back into service by the end of 2021, thanks to the development of low-cost tests and new therapies. “The pace of vaccine distribution will certainly influence the pace of our recovery,” he said.

While the first months of 2021 are likely to be difficult in terms of continued lockdowns and restrictions, many executives have said they hope that in the spring enough people will be vaccinated for consumer confidence to grow.

T-Mobile US Inc. chief Mike Sievert said it was wrong to assume that the deployment in the United States will not accelerate. “I think we’re going to see widespread vaccination by the middle of the year,” he said. Wider vaccination could benefit his business by leading to more consumer activity and more shifts in competing carriers, he said.

Some trade sentiment trackers suggest executives are bullish. According to a Bank of America predictive analytics report, business sentiment among S&P 500 companies that have released results to date has reached an all-time high from a recent low three quarters ago. The analysis assigns sentiment scores to revenue call transcripts.

Delta Air Lines Inc. chief Ed Bastian said he expects an inflection point this spring as vaccine distribution continues, consumer confidence grows and travel restrictions increase. . Other executives echoed this view, telling investors that as more people get vaccinated, they will venture out on a summer trip.

Stephen Cooper, chief executive of Warner Music Group Corp., told analysts that, as the company awaits clarification on the effectiveness of vaccines on the new strains, it will continue to promote live streaming at in-person concerts. He said the music company is hoping the live shows can resume “sooner rather than later.”

—Sharon Terlep and Suzanne Kapner contributed to this article.

Write to Sarah Krouse at [email protected]