The Wall Street Journal - 03.04.2020

B2| Friday, April 3, 2020 ** THE WALL STREET JOURNAL.**

INDEX TO BUSINESSES

These indexes cite notable references to most parent companies and businesspeople in today’s edition. Articles on regional page inserts aren’t cited in these indexes.

A Airbus..........................B5 Alphabet......................R8 Amazon.com...............B1 American Century Investments..............B9 American Express.......R8 B Bank of America.........B1 BlackRock....................B1 Blue Tractor Group.....B9 Boeing....................A2,B5 C Chevron.......................B9 D Deutsche Bank............B5 E Exxon Mobil................B9 Eypex...........................B1 F Fidelity Investments..B9 G General Electric.....A1,B5 General Motors...........A6 Goldman Sachs Group .....................................B1

H Hill-Rom Holdings......A1 I Invesco........................B1 J JPMorgan Chase ..........................B1,B3,B9 K Koninklijke Philips......A1 L Laboratory of America Holdings....................A7 Legg Mason.................B9 Luckin Coffee..............B3 M MayStreet...................B5 Medtronic....................A1 N Natixis Investment Managers..................B9 Nuveen........................B1 P-Q PG&E...........................A2 Precidian Investments .....................................B9 Quest Diagnostics......A7

R ResMed.......................A1 Restaurant Brands International.............B9 S SoftBank Group..........B4 T Tenet Healthcare........B9 Tesla............................B3 Thesys Technologies...B5 3M...............................A1 TIAA............................B2 TransDigm Group........B9 T. Rowe Price Group...B9 V Valiant Capital Management............A1 Vyaire Medical............A1 W Walgreens Boots Alliance..............B2,B10 Walmart......................B1 Walt Disney................B3 WeWork......................B4 Y Yum! Brands...............B9

INDEX TO PEOPLE

BUSINESS & FINANCE

and managers that typically begin before each shift, according to workers. The company said warehouses with confirmed cases can be closed temporarily for deep cleaning and reopen once that process is over. Amazon has secured an additional 450,000 canisters of disinfectant wipes and more than 50,000 hand sanitizers for its warehouse staff, according to a memo reviewed by the Journal. Mr. Clark of Amazon said in a blog post that the company is in the process of distribut- ing masks to workers, which will be available as soon as Thursday in some locations, with all facilities having masks by early next week. The company will donate any N95 masks it receives to healthcare workers or will sell them

Continued from page B1

B Beller, Mike.................B5 Brackeen, Dennis.......M3 Brett, Patrick..............B2 Brigati, Chris...............B2 C Callahan, Bill...............B9 Clark, Dave..................B1 D Dimon, James.............B3 G Gellasch, Tyler............B5 Grant, Danny...............A6 H Hansen, Chris.............A1

Hulit, Jeanne..............B2 J Jing, Liu.......................B3 Jones, Kathy...............B9 K Kehoe, James..............B2 Kelly, Justin................B9 M Mahaffy, Edward........B2 Marshall, Edward.....A10 McAlinden, Barry........B9 Miller, John.................B2 Morrison, Laura..........B9 Musk, Elon..................B3 N-P Neumann, Adam.........B4

Pinto, Daniel...............B3 R Rice, Jeremy...............B1 Rosenberg, Ed.............B9 S Smith, Gordon.............B3 Stringfellow, Tom.......B9 T Terwilliger, Mike.........B9 Townsend, Rob............B4 W Welch, Spencer.........A10 Williams, Branden.....M5 Y Younes, Marwan.......A10

at cost, he said. Amazon has rolled out several new policies in recent weeks. The company said employees who show symptoms or are diagnosed with Covid-19, or are in quarantine, are eligible for up to two weeks of paid sick leave. The company has also raised hourly pay for employees in the U.S. and Canada by $2 through the end of April and allowed employees to take an unlimited amount of unpaid time off through the end of the month. Mr. Clark said Am- azon expects to “go well beyond our initial $350 million investment in additional pay, and we will do so happily.” The company is planning to conduct daily audits of the new health-and-safety measures, using cameras in its facilities and machine learning to monitor social distancing. “With over 1,000 sites around the world, and so many measures and precau- tions rapidly rolled out over the past several weeks, there may be instances where we don’t get it perfect, but I can assure you that’s just what they’ll be—exceptions,” he said in the post.

Amazon

Hires

80,000

Walgreens said it is well-positioned to ride out the pandemic, though uncertainty grows if lockdowns continue. A store in Brooklyn, N.Y., last week.

NIYI FOTE/THENEWS2/ZUMA PRESS

the past decade, according to Municipal Securities Rulemak- ing Board data. Since the last financial crisis, major brokers have also significantly reduced the maximum amount of municipal debt they are willing to hold in inventory until new buyers materialize. “There’s nothing any dealer balance sheet can do when the mutual funds are getting $12 billion of redemptions a week,” said Patrick Brett, head of municipal debt capital markets at Citigroup. The plummeting prices had ripple effects in the thinly traded muni market, where managers revise the value of their portfolios based on trades of similar securities. Chris Brigati, head of municipal trading at Advisors Asset Manage- ment, said his firm marked down the value of its holdings for more than a week during the recent tumult. Calmed by Congress, muni selling has slowed for now, according to MSRB data. But with a vast chunk of the market sit- ting in mutual and exchange- traded funds that investors can easily exit, another shock could provoke further outflows, caus- ing prices to plummet again, analysts and money managers said. “If they’re gobbling up the bonds on the way up, it’s a two- edged sword,” said Little Rock, Ark., investment adviser Ed- ward Mahaffy, who has been managing municipal-bond portfolios for 35 years. “When people want to exit, the reverse is going to happen.”

Orlando, Fla., to Miami—known as Virgin Trains USA, or Bright- line—about a third the total deal. The firm has accumulated about $1.8 billion of city and school bonds issued by Chicago, which Moody’s Investors Ser- vice rates as speculative grade. When investors rattled by the spread of the coronavirus began pulling their money from muni mutual and exchange- traded funds in mid-March, high-yield funds lost 8% of their holdings to redemptions in two weeks. Nuveen had net outflows of $5.4 billion in March through the 25th, more than any other fund. The level of redemptions

surprised even Nuveen’s Mr. Miller. He acknowledged that the accumulation of money in mutual funds contributed to the selloff but said the shift in sen- timent was the paramount rea- son for the selloff. He said he still has confidence in his high- yield investments. “The way people viewed the securities switched...in the blink of an eye,” he said. These outflows hit a market that has already condensed in recent years, as the number of banks and brokerage firms that trade munis fell by 37% over

The number of banks and brokerage firms trading munis fell37%in10years.

The company plans to conduct daily audits of safety measures, using cameras and machine learning to monitor social distancing.

CLODAGH KILCOYNE/REUTERS

“As a community bank, we want to support all of the small businesses in our communi- ties,” said Ms. Hulit. “But we need to wait for the lender application forms so we know what we have to provide in terms of documentation and procedures,” she added. “Until we get that guidance from the SBA, we are on hold.” The Treasury Department and Small Business Adminis- tration, which are both work- ing on the new program, didn’t immediately respond to re- quests for comment on whether lenders would be re- quired to collect credit memos or other kinds of credit information from borrowers. Late Thursday, the Treasury Depart- ment provided more instruc- tions to lenders, but final ver-

sions of many forms needed to participate in the program weren’t immediately available. Megan Flynn, co-owner of M Flynn Jewelry in Boston, said she had inquired about the Paycheck Protection Program with two SBA-approved lenders, and was gathering documentation she might need to apply, such as payroll state- ments. “We’re prepared to really fight for it,” said Ms. Flynn re- garding the loan-application process. She hopes to use the funds to rehire three full-time workers and one part-time em- ployee. “I don’t think anyone is going to make [the process] easy for us,” she added. The new program includes a two-page borrower application that asks businesses to provide

their average monthly payroll, number of employees and other basic information. In addition to the borrower application, the SBA requires lenders to fill out an application when making a traditional SBA-backed loan. As of Thurs- day afternoon, the Trump ad- ministration hadn’t issued a final version of the additional lender application form for the new program. An SBA spokes- woman said the agency is re- vising the form. A draft copy of the lender application asks for a “credit memo” that will support information about payroll, health- insurance costs and other key expenses. It also asks lenders to certify that “loan proceeds will be used for an eligible pur- pose.”

Smaller banks also are un- sure how to navigate the process. Maine Community Bank in Biddeford, Maine, has fielded inquiries about the loan program from more than 300 small businesses. Chief Execu- tive Jeanne Hulit said the bank, which has about $950 million in assets, doesn’t have the information it needs from the government to ramp up lending.

SBA Loan

Program

Confuses

high-yield assets under management by muni mutual and exchange-traded funds more than doubled over the past decade to $136 billion, Nuveen’s holdings grew sixfold, Morning- star data show, making it the biggest high-yield muni money manager. Nuveen, a subsidiary of asset manager TIAA , controls about 1-in-4 dollars in high-yield muni mutual and exchange-traded funds as of February, Morning- star data show. In 2018, Nuveen named John Miller, who ran one of the firm’s first high-yield muni portfolios 20 years ago, as its new head of municipals. When backers of a planned New Jersey amusement park and mall, American Dream, wanted to raise money about three years ago, Nuveen pur- chased $105 million of the amusement-park bonds within days. Prices on the unrated bonds rose by about 10% over the next three months as Nu- veen, flush with investors’ cash, bought up more than half of the entire $500 million of bonds. A far cry from the high- way and high-school construc- tion bonds that make up the typical muni portfolio, the at- traction includes one of the largest indoor ski hills in the Western Hemisphere. It opened last October, but its bonds plummeted in mid-March amid coronavirus concerns. The pandemic has led to the indefinite closure of the amusement park and mall. Nuveen also reports holding at least a $1 billion stake in an unrated train line connecting

safe corner of the market. Municipal-bond funds hem- orrhaged $28 billion last month through March 25, with more than half of that money flowing out of funds managed by those four asset managers, according to Refinitiv. Nuveen attempted to unload roughly $700 million in munis in a single day, shock- ing a market where the major- ity of trades are $50,000 or less, according to Municipal Se- curities Rulemaking Board data. Those muni holdings had built up over the past decade as it got easier for investors to buy and sell munis. Money managers now control nearly $1.6 trillion in munis through mutual funds, separately managed accounts and exchange- traded funds, according to data from the Federal Reserve and Citigroup. To help satisfy investors’ hunger for yield, some funds piled into risky debt, financing projects such as charter schools and nursing homes. As of Feb- ruary, five money managers control more than half of the assets in high-yield funds, according to Morningstar data. But no manager dominated the competition for junk bonds like Chicago-based Nuveen. As

Munis’

Weakness

Exposed

nancial results for the quarter ended Feb. 29, a period that preceded the start of wide- spread consumer stockpiling of food and other goods. “The full impact of Covid-19 won’t be known for months,” Walgreens finance chief James Kehoe said in a call with analysts, referring to the disease caused by the virus. “The situation is quite fluid and we ex- pect volatility.” Walgreens’s shares fell 6.3%, to $40.32 on Thursday, their lowest close since March 2013. The Deerfield, Ill.-based chain generated stronger- than-expected sales during its latest quarter. It reported $35.82 billion in sales for the quarter, up from $34.53 billion a year earlier. Operating in-

come fell 19% to $1.2 billion, in part because of reimburse- ment pressure on prescription drugs. Earnings dropped to $946 million, or $1.07 a share, from $1.16 billion, or $1.24 a share, a year earlier. The company said it earned an adjusted profit of $1.52 a share for the latest period, 6 cents more than analysts forecast. In March, executives said, the end-of-month drop-off was most pronounced in communi- ties where residents have been directed to stay home. Sales of beauty products and so-called seasonal items such as holiday decorations fell sharply, while sales rose for health-related products and staples. Walgreens, in the midst of a restructuring program, is di-

verting funds intended to en- able cost cutting to instead manage the coronavirus crisis. The company is paying bo- nuses to workers, increasing home delivery and shortening store hours. In the U.K., where Walgreens operates the drug- store chain Boots, the company has shut down most of its 600 optician centers. Executives said the company is well-positioned to ride out the pandemic, though uncertainty grows if mass lockdowns continue beyond May. A planned share-buyback program will proceed as planned. “We are confident this is a temporary situation,” Mr. Ke- hoe said.

Pharmacy chain Walgreens Boots Alliance Inc. said U.S. store sales fell sharply in the final week of March, offsetting gains from an initial surge in demand as Americans rushed to stock up amid the spread of coronavirus. The drop-off could have broader implications for U.S. retailers given that drugstores are among the few businesses permitted to operate even in places with the tightest re- strictions, and the chain sells staples and medications in great demand amid the pandemic. Walgreens provided an up- date on the pandemic’s impact on business as it disclosed fi-

BYSHARONTERLEP ANDMICAHMAIDENBERG

Walgreens Sales Drop Off

After Early Coronavirus Surge

Heard on the Street: Diagnosis is murky for Walgreens.......B10

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The Wall Street Journal - 03.04.2020

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