From Jaguar to Macy’s, in­dus­tries feel gloom

San Antonio Express-News - - BUSINESS - By Ce­cile Daurat

Trade wars, China’s slow­down, er­ratic stock mar­kets: The out­look is get­ting grim­mer for an in­creas­ing num­ber of com­pa­nies across the globe.

Just Thurs­day, more than a half-dozen cor­po­rate giants ei­ther low­ered their profit fore­cast, an­nounced mas­sive job cuts or pulled plans in the face of mar­ket volatil­ity. Amer­i­can Air­lines, Jaguar Land Rover, Macy’s and Black­Rock were among the big­gest ca­su­al­ties, join­ing the likes of Ap­ple and FedEx that have warned re­cently that the fu­ture isn’t look­ing as good as it did just a few weeks ago.

The year is just 10 days young. Here’s a look at the main in­dus­tries af­fected by the cur­rent gloom:

Trans­porta­tion: U.S. air­lines are fac­ing a dark­ened out­look as eco­nomic uncer­tainty threat­ens de­mand. Amer­i­can Air­lines’ pared es­ti­mate for a key gauge of pric­ing power on Thurs­day fol­lowed a sim­i­lar move by Delta Air Lines Inc. at the be­gin­ning of the year. And that was be­fore ac­count­ing for a par­tial gov­ern­ment shut­down in the coun­try.

Car­ri­ers also gave a darker view for 2019. FedEx cut its out­look a few weeks ago, just three months af­ter rais­ing it, re­flect­ing an abrupt change in its view of the global econ­omy. Chief Ex­ec­u­tive Of­fi­cer Fred Smith cited trade ten­sions, es­pe­cially be­tween the U.S. and China, among its trou­bles, say­ing most of the prob­lems he faced were due to “bad po­lit­i­cal choices.”

Au­tos: If you’re look­ing for signs that the auto in­dus­try may be head­ing into an­other slump af­ter an ex­tended boom in Europe and the U.S., Thurs­day of­fered a glimpse of what may lie ahead: Within hours, Jaguar and Ford an­nounced ma­jor cost-cut­ting pro­grams.

As part of a broad re­view of its Euro­pean busi­ness that could in­clude plant clo­sures, Ford took the most ag­gres­sive ac­tion in the re­gion so far. Jaguar, Bri­tain’s big­gest car­maker, fol­lowed with a plan for 4,500 lay­offs, about 10 per­cent of its global work­force. The cul­prits, ac­cord­ing to Jaguar: Brexit, flag­ging de­mand for diesel-pow­ered ve­hi­cles and a down­turn in China.

Re­tail, luxury brands: The re­tail in­dus­try also shows signs of suf­fer­ing on all con­ti­nents. The chal­lenges have dif­fer­ent roots, but one thing’s for sure: China’s eco­nomic slow­down looms largest over luxury brands like Tif­fany and Louis Vuit­ton owner LVMH. Tif­fany said last week that its weaker-thanex­pected sales high­lighted a “clear pat­tern” of Chi­nese shop­pers cut­ting back on spend­ing when they’re over­seas.

On Thurs­day, Macy’s and Kohl’s gave the clear­est in­di­ca­tion so far that the U.S. hol­i­day sea­son might not have been the smash hit some hoped for. Macy’s darker out­look and Kohl’s dis­ap­point­ing sales com­pounded con­cerns that ris­ing in­ter­est rates and Chi­nese trade tur­moil could dent con­sumer spend­ing, a back­bone of the U.S. econ­omy.

The doom and gloom mir­rored the sit­u­a­tion in con­ti­nen­tal Europe and the U.K., where re­tail­ers are also grap­pling with uncer­tainty about the coun­try’s exit from the Euro­pean Union. Some com­pa­nies are weath­er­ing the storm, like Tesco, the U.K.’s largest re­tailer, which came out with solid re­sults. Weak­ness was most pro­nounced among smaller, more fo­cused re­tail­ers like Hal­fords Group, which sells au­to­mo­tive and bi­cy­cling gear.

Fi­nance: As­set man­agers are un­der pres­sure as volatil­ity roils mar­kets and in­vestors have piled into funds with low fees. Black­Rock was the lat­est com­pany to an­nounce a re­duc­tion in its work­force on Thurs­day, with a plan to dis­miss 500 em­ploy­ees, or 3 per­cent glob­ally, in the weeks ahead. That’s Black­Rock’s largest head­count re­duc­tion since 2016.

AQR Cap­i­tal Man­age­ment, the gi­ant quan­ti­ta­tive fund man­ager run by Cliff As­ness, an­nounced job cuts two days ago af­ter a year of poor per­for­mance. State Street Corp. is also trim­ming its work­force, start­ing this week, ac­cord­ing to peo­ple with knowl­edge of the plan. The bank is cut­ting 15 per­cent of its senior man­age­ment, as it new chief ex­ec­u­tive con­tin­ues with a plan to whit­tle man­age­ment ranks.

In­dus­tri­als: The er­ratic mar­kets of the past weeks have started to have an im­pact on fi­nan­cial plans at big cor­po­ra­tions. U.S. in­dus­trial gi­ant United Tech­nolo­gies Corp. said Thurs­day it has halted the sale of its fire-safety and se­cu­rity busi­ness be­cause of re­cent volatil­ity. The com­pany will fo­cus in­stead on its broader plan to sep­a­rate such dis­parate busi­nesses as jet en­gines, el­e­va­tors and cli­mate con­trols.

Tech­nol­ogy: The big­gest gloomy sur­prise to greet 2019 was Ap­ple Inc.’s sales fore­cast cut on Jan. 3, the first time in al­most two decades that the com­pany low­ered its out­look. The com­pany said it didn’t an­tic­i­pate the mag­ni­tude of the eco­nomic slow­down in emerg­ing mar­kets, par­tic­u­larly in China. There were warn­ing signs, as sev­eral key Ap­ple sup­pli­ers trimmed their own es­ti­mates in the pre­vi­ous months. But the Ap­ple news rip­pled through the in­dus­try.

Mike Si­mons / As­so­ci­ated Press

The air­line in­dus­try faces a dark­ened eco­nomic out­look. Amer­i­can Air­lines’ pared es­ti­mate for a key gauge of pric­ing power last week fol­lowed a sim­i­lar move by Delta.

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