Research: Trivago: Struggling With an Uncertain Future
COVID-19 Initial Impact Report
Trivago N.V.
NASDAQ:TRVG
Analyst Note
Updated May 26, 2020
COVID-19 Net Benefit Score: -1.0
Financial Stress Test Ratings:
Free Cash Flow: A+
Interest Coverage: A++
Summary
Trivago N.V. (“Trivago” or “the Company”) is a technology company based in Dusseldorf, Germany. It provides internet-related services and products in the fields of hotels, lodging and metasearch. Trivago primarily facilitates searching, comparing and booking of hotel rooms. Being a pure play online travel company, Trivago’s derives a large share of its revenues through the “cost-per-click” (CPC) model, wherein online travel agencies (OTAs) pay Trivago to refer traffic to their respective platforms.
Market Data
Financial Data Stated in Millions
Share
Price
1.68
Market
Capitalization
591.3
Net
Debt
118.4
Total
Debt
99.7
Cash &
Equivalents
218.1
Enterprise
Value
595.2
Basic Shares
O/S
351.99
Stock Chart
Trivago: Struggling with an uncertain future
Trivago N.V. (“Trivago” or “the Company”) operates an online global hotel and accommodation search platform. Through this platform, Trivago primarily facilitates searching, comparing and booking of hotel rooms. Being a technology company, Trivago is asset-light, enjoys a relatively unleveraged balance sheet and is consequently free of debt servicing pressures. However, with its revenues predominantly reliant on travel and tourism, the company finds itself facing strong headwinds on the revenue front given the Covid-19 pandemic. The heightened health risks due to the ongoing pandemic has brought travel and tourism to a virtual halt thereby squeezing the key revenue drivers for Trivago which include globalization, consumerism and cheap travel. We believe that the fallout from the current pandemic will continue to resonate over the medium term with travel avoidance reigning over both business and leisure segments.
➤ Key Factors: Trivago’s ability to generate revenues are driven by the state of the global travel and tourism industry which has been deeply impacted because of the Covid-19 pandemic. Not only has the pandemic brought travel to a near halt In the immediate term, it is expected to continue impacting consumer behaviour over the medium term as well with leisure travellers more likely to defer international vacations and businesses preferring online platforms over travel. These factors, coupled with the intense competition (which exacerbated post Google’s entry last year) are expected to impact Trivago negatively and may require a pivot on their current business model.
➤ Financial Stress Test: Being an online business, Trivago is asset-light and hence, a low debt operator. This relieves the company of debt servicing pressures and creates liquidity legroom to weather an unconducive business climate. Further, the company currently has a low EV/FCF ratio thereby suggesting that it may be attractive to investors seeking value. The financial ratios, however, only tell a part of the story in the current economic backdrop. Trivago’s business model is currently battling a new economic reality where people’s mindset and attitude towards travelling has undergone a drastic change and this exposes the company to an uncertain future. Therefore, it becomes extremely important to view these ratios in conjunction with the Pandemic Impact Factors.
Trivago Pandemic Impact Factors Review
NXTanalytic considers 7 factors and 30 specific indications that we believe will impact companies during and after the Covid-19 pandemic. These factors include: Online Business Profiles; Dealing with Consumers In Person; Effect of Increased Health Regulations; Supply Chain Risks; Changes and Disruption in Tourism, Travel and Hospitality; Increased Demand for Health Care and Health Safety; WFH and SAH.
COVID-19 Factor Analysis
Net
Benefit
NEGATIVE
Total Regression
Score
-1.00
Covid-19
Risk Rate
-7.00
Covid-19
Benefit Rate
6.00
Pandemic Impact Factor Analysis
Being an online business, Trivago is a pure play in the technology space. This aligns the company well with our post pandemic thesis on the changing marketplace and earns it a few positive points. The organization is at the forefront of innovation and has good financial metrics. Trivago, in fact, is particularly lean and has been trying to turn itself around and increase profitability.
Trivago’s pain-point is that they derive their revenues from a sector that has unprecedented negative exposure to the Covid-19 pandemic. As mentioned in the earlier section, companies operating in the travel and tourism space are not only at a high risk during the current travel shutdowns, but they also face an uncertain future with potential changes in consumer behaviour. We believe that speculating on how the travel industry will emerge from the current pandemic in terms of financial wellbeing is high risk. Also, the longer the pandemic lingers, the deeper and long lasting will be the impact on consumer behaviour. While leisure travellers are likely to defer vacation plans, the impact on business travel will be more profound as virtual meetings and conferences are likely to become the norm. At this point, it is difficult to argue that boarding a plane and traveling to certain places of the world will ever be the same or even perceived as being safe by travellers.
These changes will directly impact Trivago. As mentioned earlier, the company generates revenues primarily on a CPC basis by the referring users to OTA websites. An OTA advertiser is charged when an online user clicks on its advertised rate. With consumer travel preferences undergoing a drastic change, the OTA business models are likely to undergo changes and Trivago, by association, will feel the pain.
Relevant Factors
➤ Online Presence: Trivago is primarily a technology company and its business platform is entirely online. Innovation, proprietary technology development, and a lean business model based on ad revenue has potential to operate. This business, however, cannot operate anywhere near its peak capacity owing to the current pandemic’s adverse impact on the travel and tourism industry. Moreover, with travel behaviour likely to undergo change, we are not sure how long it will take for travel demand to pick up.
➤ Travel, Tourism, Hospitality and Entertainment: The travel, tourism, hospitality and entertainment industries are at a high risk in short- as well as medium-term. While the current lockdowns and restrictions are severely impacted international travel, the changes in travel behaviour is likely to have a deeper impact. Owing to its business model, Trivago’s is facing the heat and is likely to be under stress over the medium term as well. This risk alone is enough to justify a net negative score for the company.
➤ Increased Health Regulations: The hospitality industry, which is a significant referral revenue source for Trivago, is likely to face margin pressures on account of increased healthcare regulations and the consequent compliance costs. Going forward, hotels and other hospitality operators are more likely to focus on alleviating consumer concerns by spending more on health and safety measures rather than advertising their low cost offerings (which is Trivago’s key value proposition for online users). This squeeze in the hospitality industry margins may eat into Trivago’s revenues.
➤ In Person Businesses, Crowds & Groups: While some consumers will travel for business, major sporting events and entertainment, businesses that are based on large crowds or groups will be negatively impacted. This may impact Trivago as well.
Pandemic Factor Screening and Scoring
NXTanalytic research is based on the thesis that consumer and business behaviour and practices will be changed significantly as a result of the pandemic and its aftermath. We have developed a group of seven major factors that we believe indicate whether a company has an increased risk or reward profile.
We approach our analysis in the context of three time periods:
1. Near term effect of the pandemic
2. A Resulting Recession/Bear Market
3. Longer Term Psychological Effects: Changes in consumer and business behavior and practices as a result of the pandemic.
Scoring and Rating for Factor Exposure
We objectively score businesses based on positive and negative factors and how significantly they may be affected by each applicable factor. Our model generates a total regression score by generating a coefficient of the risk and reward scores given to the company by an experienced analyst.
We generate a Total Regression Score, a Covid-19 Risk Rate and a Covid-19 Benefit Rate.
➤ Online Businesses: Due to social distancing and lockdowns and Work From Home, businesses that operate online, or produce the tools for companies to adapt to more demand for online services should experience a surge in demand due to the coronavirus, Covid-19 outbreak. Consumers will more rapidly move online across many categories. Trends already in place will accelerate. Companies whose businesses are online or are rapidly moving online are better prepared to serve the market while those based on bricks and mortar are more likely to be challenged.
➤ Dealing with Consumers In Person: Businesses that deal with large numbers of people in close proximity to each other will be negatively affected long term. Regardless of how long the pandemic will continue, its psychological, economic and financial effects, have inevitably altered the perception of risk from exposure to large group settings. Consumers are going to avoid gathering in large groups – particularly individuals over 60. We believe consumers will be fearful of the virus and we are assuming that even when the rate of infection has slowed through social distancing and other “curve flattening” efforts, the virus will be a threat for more than a year or until widespread vaccination has taken place. Even after vaccination efforts minimize the immediate threat consumer behavior will be changed long term and concern over future pandemics will be heightened for many years.
➤ Increased Health Regulations and Restrictions: Restrictions on travel and trade as a result of the pandemic are likely to remain in place for months or years and public health regulations will become stricter and more widespread. It’s highly probable that enhanced screening, permit and visa requirements, reductions in ease of travel and transport of goods will be impacted or implemented. Governments, in an effort to restore consumer confidence, will enforce new regulations designed to protect consumers from the current pandemic and future pandemics will overshoot and result in impairing businesses who rely on international supply chains, movement of large numbers of people, or are otherwise perceived as presenting a high risk of infection to consumers.
➤ Supply Chain and Cross Border Risks: The fact the virus can remain alive for many days on inanimate objects and surfaces is a good example of a pending supply chain issue. Perishable product supply chains designed to move items from producer to consumer in days could be significantly impacted. Overall we believe that businesses that ship goods internationally or rely on global supply chains are at risk of business interruption as the pandemic circulates globally. Further, companies with long international supply chains in countries with poor healthcare systems will likely be pressured to replace suppliers and build new supply chains closer to home markets in order to avoid new border restrictions and the potential of localized lockdowns put in place to handle future outbreaks.
➤ Travel, Tourism, Hospitality and Entertainment: The most obviously impacted sectors are businesses on the front line of day to day consumer interaction. Restaurants, coffee shops, event venues, bars, pubs, hotels, resorts, etc could experience a prolonged or permanent change in consumer demand or be required to spend significantly on technologies and services designed to mitigate consumer concerns over health risks. Consumers will likely continue to avoid contact with crowds or reduce visits to brick and mortar hospitality and entertainment focused businesses. Companies in these sectors will need to change business practices and deploy technologies and systems designed to protect customers – many of these do not exist yet or are expensive.
➤ Work From Home and Stay At Home: The most obvious winners are companies who enable consumer cocooning or Work From Home (WFH) and Stay at Home (SAH) behaviour. As these social and business trends become entrenched, demand for a range of new solutions for managing a distributed workforce will provide existing platform companies and new entrants with opportunities to grow market share and fill demand. Companies not offering WFH opportunities will suffer, compromising their ability to attract the best employees. The delivery economy, pioneered by the likes of Amazon.com and any company that focuses on in home exercise, consumer electronics, home entertainment and ecommerce are well positioned to profit from a long term trend towards SAH behaviour. The trend towards non-brick and mortar retail, will accelerate.
➤ Health, Medicine & Safety: Companies focused on the health and safety of consumers and crowds will be positioned to assist businesses who will require new and robust health security solutions in order to attract customers. Heightened focus on health and virus risks will likely spur expenditures on antiviral medications and treatments, vaccines, screening systems and devices, rapid testing, containment and quarantine solutions and services, and telemedicine. Demand for antimicrobial or antiviral materials or other “bio tech materials” and products is likely to be strong in a post pandemic world.
Financial Stress Test
FINANCIAL RATIOS RATINGS
Excellent
Strong
Satisfactory
Poor
Low Quality
High Risk
Free Cash Flow: A+
FINANCIAL RATIOS RATINGS
Excellent
Strong
Satisfactory
Poor
Low Quality
High Risk
Interest Coverage: A++
Financial Ratios
FYE –
Dec. 31st
2019 A
Financial
Leverage
1.24 X
Debt-to-
Capital
0.10 X
Debt-to-
Assets
0.09 X
Debt-to-
Equity
0.11 X
EBIT/
Interest
>100 X
EV/
FCF
8.99 X
NXTanalytic reviews a series of financial measures designed to provide a snapshot of the company’s financial health and ability to deal with the challenges or opportunities created by the pandemic, the recession and post pandemic economic environment.
Our opinion
Trivago presents an interesting case in the current business environment. While the company fares well in the financial stress tests given its asset-light model and low gearing, it is a player in the travel, tourism and hospitality industry, which is witnessing considerable pain. As things stand currently, travel restrictions and safety concerns are likely to continue playing on consumer sentiment over the medium term, if not longer.
In terms of financial stress ratios, Trivago appears to be healthy on account of low gearing and high interest coverage ratios. Hence, the company is comfortably placed as far as its debt-servicing capabilities are concerned. Further, given the conservative debt-to-equity and debt-to-asset ratios, Trivago may find it easy to raise debt capital if it so requires. The relative financial strength, however, is more than offset by its business sustainability concerns since its business model is currently battling a new economic reality where people’s mindset and attitude towards travelling has undergone a drastic change thereby exposing the company to an uncertain future.
Being an innovative and lean online business, Trivago seems to score well on adaptability in the backdrop of Covid-19. The company’s business sustainability, however, seems to be in choppy waters given the shift in consumer preferences and this will strike at the very core of its business. Hence, taking all the business and financial factors into consideration, we believe that potential investors in Trivago should exercise extreme caution while making investment decisions even though the current valuation (EV/FCF) may appear to be attractive.
Stress Test Highlights
➤ Debt-to-Assets: The company has a strong debt-to-assets ratio at 0.09 X indicating that the majority of the company’s assets have been funded through equity capital and not debt. This is desirable as it means the company could seek further financing, when needed. This becomes a comforting factor especially in an adverse business climate.
➤ EV/FCF: A low EV/FCF ratio signals that a stock may be trading at an attractive valuation. Based on a multiple of 8.99 X, Trivago appears to be value buy for investors. However, this needs to be analysed in conjunction with Trivago’s peers.
➤ Interest Coverage: Being a low debt operator, Trivago’s interest coverage ratio is significantly high (>1000.0 X). This indicates there is no financial risk to this company in terms of its debt servicing capabilities.
Financial Stress Test Analysis
NXTanalytic completes a financial analysis of each company using data taken from the most recently audited financial statements. Our goal is to provide a snapshot of a company’s financial condition and ability to survive a prolonged period of reduced growth, and/or finance growth or restructuring to take advantage of new opportunities.
Cash Flows as a Focus of Screening
Debt Servicing
➤ Interest Coverage Ratio = EBIT / Interest Expense: A powerful measurement of the ‘survivability’ of a corporation. It reflects the ability of a company to pay interest on the outstanding debt and is thus an important assessment of short-term solvency. If the ratio is underneath 1.0 X, this means that the company cannot currently cover interest charges on its debt from current operational income. This could mean that the company is funding itself through the sale of assets or further financing; which are unsustainable. The higher the ratio, the higher probability to survive in the future financial hardship.
Free Cash Flow Valuation
➤ Interest Coverage Ratio = EBIT / Interest Expense: A powerful measurement of the ‘survivability’ of a corporation. It reflects the ability of a company to pay interest on its outstanding debt and is thus an important assessment of short-term solvency. If the ratio is underneath 1.0 X, it indicates the company cannot currently cover interest charges on its debt from operational income. This could mean that the company is funding itself through the sale of assets or further financing; which are unsustainable measures. The higher the ratio, the higher the company’s ability to survive financial hardship.
➤ EV/FCF Ratio = Enterprise Value / Free Cash Flow: Based on our debt servicing thesis we primarily value companies based on their cash flows. We rely on the EV/FCF ratio to assess the total valuation of the company in relation to its ability to generate cash flows. Enterprise Value is the value of the entire company, both its debt and traded equity. When this is divided by its Free Cash Flow we see how much we are paying to buy that cash flow. The lower the ratio the cheaper it is to “buy” the cash flows of the company.
Leverage Ratios
Debt ratios are classic balance sheet health measuring tools used to indicate potential risks to future financing ability (ie. violating debt covenants) or as a barometer of the defensive position of the company if cash flows are ever an issue. They are long-term solvency metrics and reflect the degree to which the company is financing its operation through debt versus equity. If a company has poor leverage ratios (too much debt), it might need to aggressively finance its growth through debt and as a result require more and more cash flow from operations to adequately service its debt. Our view is that companies with less debt are more likely to be able to withstand challenges or fund opportunities created by the pandemic.
➤ Financial Leverage Ratio = Total Debt / Total Equity: The Financial Leverage Ratio is a measure of the degree to which a company is financing its operations through debt. More specifically, it reflects the ability of shareholder equity to cover all outstanding debts in the event of a business downturn.
➤ Debt-to-Capital Ratio = Total Debt / (Total Debt + Total Shareholder’s Equity): The Debt-to-Capital ratio measures the amount of financial leverage in a company. This tells us whether a company is prone to using debt financing or equity financing. A company with a high Debt-to-Capital ratio, compared to a general or industry average, may be impared due to the cost of servicing debt and therefore increasing its default risk.
➤ Debt-to-Equity Ratio = Total Debt / Total Shareholder’s Equity: A high Debt-to-Equity ratio generally indicates that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of additional interest expense. If the company’s interest expense grows too high, it may increase the company’s chances of a default or bankruptcy.
➤ Debt-to-Assets Ratio = Total Debt / Total Assets: The Debt-to-Assets ratio shows the degree to which a company has used debt to finance its assets. This ratio can be used to evaluate whether a company has enough assets to meet its debt obligations. A ratio greater than 1 indicates that the entire company’s assets are worth less than its debt.
CONFLICT OWNERSHIP RELATED DISCLOSURES
Does the Analyst or any member of the Analyst’s household have a financial interest in the securities of the subject issuer?
No
Does the Analyst or household member serve as a Director or Officer or Advisory Board Member of the issuer?
No
Does NXTanalytic or the Analyst have any actual material conflicts of interest with the issuer?
No
Does NXTanalytic and/or one or more entities affiliated with NXTanalytic beneficially own common shares (or any other class of common equity securities) of this issuer which constitutes more than 1% of the presently issued and outstanding shares of the issuer?
No
Has the Analyst had an onsite visit with the Issuer within the last 12 months?
No
Has the Analyst been compensated for travel expenses incurred as a result of an onsite visit with the Issuer within the last 12 months?
No
Has the Analyst received any compensation from the subject company in the past 12 months?
No
U.K. DISCLOSURES
This research report was prepared by NXTanalytic Inc., which is not a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. NXTANALYTIC IS NOT SUBJECT TO U.K. RULES WITH REGARD TO THE PREPARATION OF RESEARCH REPORTS AND THE INDEPENDENCE OF ANALYSTS. The contents hereof are intended solely for the use of, and may only be issued or passed onto persons with which NXTanalytic has given consent. This report does not constitute advice, an offer to sell or the solicitation of an offer to buy any of the securities discussed herein.
CANADIAN & U.S. DISCLOSURES
This research report was prepared by NXTanalytic, which is not a registrant nor is it a member of the Investment Industry Regulatory Organization of Canada. This report does not constitute advice, an offer to sell or the solicitation of an offer to buy any of the securities discussed herein. NXTanalytic is not a registered broker-dealer in the United States or any country. The firm that prepared this report may not be subject to U.S. rules regarding the preparation of research reports and the independence of research analysts.
INFORMATION & INTELLECTUAL PROPERTY
All information used in the publication of this report has been compiled from publicly available sources that NXTanalytic believes to be reliable. The opinions, estimates, and projections contained in this report are those of NXTanalytic Inc. (“NXT”) as of the date hereof and are subject to change without notice. NXT makes every effort to ensure that the contents have been compiled or derived from sources believed to be reliable and that contain information and opinions that are accurate and complete; however, NXT makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained herein and accepts no liability whatsoever for any loss arising from any use of or reliance on this report or its contents. Information may be available to NXT that is not herein. This report is provided, for informational purposes only and does not constitute advice, an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction. Its research is not an offer to sell or solicitation to buy any securities at any time now, or in the future. Neither NXT nor any person employed by NXTanalytic accepts any liability whatsoever for any direct or indirect loss resulting from any use of its research or information it contains. This report may not be reproduced, distributed, or published without any the written expressed permission of NXTanalytic Inc. and/or its principals.
©2020, NXTanalytic. All rights reserved.
Government
Low Iron Levels In Blood Could Trigger Long COVID: Study
Low Iron Levels In Blood Could Trigger Long COVID: Study
Authored by Amie Dahnke via The Epoch Times (emphasis ours),
People with inadequate…
Share this:
Authored by Amie Dahnke via The Epoch Times (emphasis ours),
People with inadequate iron levels in their blood due to a COVID-19 infection could be at greater risk of long COVID.
A new study indicates that problems with iron levels in the bloodstream likely trigger chronic inflammation and other conditions associated with the post-COVID phenomenon. The findings, published on March 1 in Nature Immunology, could offer new ways to treat or prevent the condition.
Long COVID Patients Have Low Iron Levels
Researchers at the University of Cambridge pinpointed low iron as a potential link to long-COVID symptoms thanks to a study they initiated shortly after the start of the pandemic. They recruited people who tested positive for the virus to provide blood samples for analysis over a year, which allowed the researchers to look for post-infection changes in the blood. The researchers looked at 214 samples and found that 45 percent of patients reported symptoms of long COVID that lasted between three and 10 months.
In analyzing the blood samples, the research team noticed that people experiencing long COVID had low iron levels, contributing to anemia and low red blood cell production, just two weeks after they were diagnosed with COVID-19. This was true for patients regardless of age, sex, or the initial severity of their infection.
According to one of the study co-authors, the removal of iron from the bloodstream is a natural process and defense mechanism of the body.
But it can jeopardize a person’s recovery.
“When the body has an infection, it responds by removing iron from the bloodstream. This protects us from potentially lethal bacteria that capture the iron in the bloodstream and grow rapidly. It’s an evolutionary response that redistributes iron in the body, and the blood plasma becomes an iron desert,” University of Oxford professor Hal Drakesmith said in a press release. “However, if this goes on for a long time, there is less iron for red blood cells, so oxygen is transported less efficiently affecting metabolism and energy production, and for white blood cells, which need iron to work properly. The protective mechanism ends up becoming a problem.”
The research team believes that consistently low iron levels could explain why individuals with long COVID continue to experience fatigue and difficulty exercising. As such, the researchers suggested iron supplementation to help regulate and prevent the often debilitating symptoms associated with long COVID.
“It isn’t necessarily the case that individuals don’t have enough iron in their body, it’s just that it’s trapped in the wrong place,” Aimee Hanson, a postdoctoral researcher at the University of Cambridge who worked on the study, said in the press release. “What we need is a way to remobilize the iron and pull it back into the bloodstream, where it becomes more useful to the red blood cells.”
The research team pointed out that iron supplementation isn’t always straightforward. Achieving the right level of iron varies from person to person. Too much iron can cause stomach issues, ranging from constipation, nausea, and abdominal pain to gastritis and gastric lesions.
1 in 5 Still Affected by Long COVID
COVID-19 has affected nearly 40 percent of Americans, with one in five of those still suffering from symptoms of long COVID, according to the U.S. Centers for Disease Control and Prevention (CDC). Long COVID is marked by health issues that continue at least four weeks after an individual was initially diagnosed with COVID-19. Symptoms can last for days, weeks, months, or years and may include fatigue, cough or chest pain, headache, brain fog, depression or anxiety, digestive issues, and joint or muscle pain.
Uncategorized
February Employment Situation
By Paul Gomme and Peter Rupert The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000…
Share this:
By Paul Gomme and Peter Rupert
The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000 average over the previous 12 months. The payroll data for January and December were revised down by a total of 167,000. The private sector added 223,000 new jobs, the largest gain since May of last year.
Temporary help services employment continues a steep decline after a sharp post-pandemic rise.
Average hours of work increased from 34.2 to 34.3. The increase, along with the 223,000 private employment increase led to a hefty increase in total hours of 5.6% at an annualized rate, also the largest increase since May of last year.
The establishment report, once again, beat “expectations;” the WSJ survey of economists was 198,000. Other than the downward revisions, mentioned above, another bit of negative news was a smallish increase in wage growth, from $34.52 to $34.57.
The household survey shows that the labor force increased 150,000, a drop in employment of 184,000 and an increase in the number of unemployed persons of 334,000. The labor force participation rate held steady at 62.5, the employment to population ratio decreased from 60.2 to 60.1 and the unemployment rate increased from 3.66 to 3.86. Remember that the unemployment rate is the number of unemployed relative to the labor force (the number employed plus the number unemployed). Consequently, the unemployment rate can go up if the number of unemployed rises holding fixed the labor force, or if the labor force shrinks holding the number unemployed unchanged. An increase in the unemployment rate is not necessarily a bad thing: it may reflect a strong labor market drawing “marginally attached” individuals from outside the labor force. Indeed, there was a 96,000 decline in those workers.
Earlier in the week, the BLS announced JOLTS (Job Openings and Labor Turnover Survey) data for January. There isn’t much to report here as the job openings changed little at 8.9 million, the number of hires and total separations were little changed at 5.7 million and 5.3 million, respectively.
As has been the case for the last couple of years, the number of job openings remains higher than the number of unemployed persons.
Also earlier in the week the BLS announced that productivity increased 3.2% in the 4th quarter with output rising 3.5% and hours of work rising 0.3%.
The bottom line is that the labor market continues its surprisingly (to some) strong performance, once again proving stronger than many had expected. This strength makes it difficult to justify any interest rate cuts soon, particularly given the recent inflation spike.
unemployment pandemic unemploymentSpread & Containment
Another beloved brewery files Chapter 11 bankruptcy
The beer industry has been devastated by covid, changing tastes, and maybe fallout from the Bud Light scandal.
Share this:
Before the covid pandemic, craft beer was having a moment. Most cities had multiple breweries and taprooms with some having so many that people put together the brewery version of a pub crawl.
It was a period where beer snobbery ruled the day and it was not uncommon to hear bar patrons discuss the makeup of the beer the beer they were drinking. This boom period always seemed destined for failure, or at least a retraction as many markets seemed to have more craft breweries than they could support.
Related: Fast-food chain closes more stores after Chapter 11 bankruptcy
The pandemic, however, hastened that downfall. Many of these local and regional craft breweries counted on in-person sales to drive their business.
And while many had local and regional distribution, selling through a third party comes with much lower margins. Direct sales drove their business and the pandemic forced many breweries to shut down their taprooms during the period where social distancing rules were in effect.
During those months the breweries still had rent and employees to pay while little money was coming in. That led to a number of popular beermakers including San Francisco's nationally-known Anchor Brewing as well as many regional favorites including Chicago’s Metropolitan Brewing, New Jersey’s Flying Fish, Denver’s Joyride Brewing, Tampa’s Zydeco Brew Werks, and Cleveland’s Terrestrial Brewing filing bankruptcy.
Some of these brands hope to survive, but others, including Anchor Brewing, fell into Chapter 7 liquidation. Now, another domino has fallen as a popular regional brewery has filed for Chapter 11 bankruptcy protection.
Image source: Shutterstock
Covid is not the only reason for brewery bankruptcies
While covid deserves some of the blame for brewery failures, it's not the only reason why so many have filed for bankruptcy protection. Overall beer sales have fallen driven by younger people embracing non-alcoholic cocktails, and the rise in popularity of non-beer alcoholic offerings,
Beer sales have fallen to their lowest levels since 1999 and some industry analysts
"Sales declined by more than 5% in the first nine months of the year, dragged down not only by the backlash and boycotts against Anheuser-Busch-owned Bud Light but the changing habits of younger drinkers," according to data from Beer Marketer’s Insights published by the New York Post.
Bud Light parent Anheuser Busch InBev (BUD) faced massive boycotts after it partnered with transgender social media influencer Dylan Mulvaney. It was a very small partnership but it led to a right-wing backlash spurred on by Kid Rock, who posted a video on social media where he chastised the company before shooting up cases of Bud Light with an automatic weapon.
Another brewery files Chapter 11 bankruptcy
Gizmo Brew Works, which does business under the name Roth Brewing Company LLC, filed for Chapter 11 bankruptcy protection on March 8. In its filing, the company checked the box that indicates that its debts are less than $7.5 million and it chooses to proceed under Subchapter V of Chapter 11.
"Both small business and subchapter V cases are treated differently than a traditional chapter 11 case primarily due to accelerated deadlines and the speed with which the plan is confirmed," USCourts.gov explained.
Roth Brewing/Gizmo Brew Works shared that it has 50-99 creditors and assets $100,000 and $500,000. The filing noted that the company does expect to have funds available for unsecured creditors.
The popular brewery operates three taprooms and sells its beer to go at those locations.
"Join us at Gizmo Brew Works Craft Brewery and Taprooms located in Raleigh, Durham, and Chapel Hill, North Carolina. Find us for entertainment, live music, food trucks, beer specials, and most importantly, great-tasting craft beer by Gizmo Brew Works," the company shared on its website.
The company estimates that it has between $1 and $10 million in liabilities (a broad range as the bankruptcy form does not provide a space to be more specific).
Gizmo Brew Works/Roth Brewing did not share a reorganization or funding plan in its bankruptcy filing. An email request for comment sent through the company's contact page was not immediately returned.
bankruptcy pandemic social distancing
Low Iron Levels In Blood Could Trigger Long COVID: Study
February Employment Situation
Another beloved brewery files Chapter 11 bankruptcy
Walmart joins Costco in sharing key pricing news
Walmart has really good news for shoppers (and Joe Biden)
When Military Rule Supplants Democracy
Mortgage rates fall as labor market normalizes
Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month
Angry Shouting Aside, Here’s What Biden Is Running On
Jack Smith Says Trump Retention Of Documents “Starkly Different” From Biden
-
Uncategorized2 weeks agoAll Of The Elements Are In Place For An Economic Crisis Of Staggering Proportions
-
Uncategorized1 month agoCathie Wood sells a major tech stock (again)
-
Uncategorized3 weeks agoCalifornia Counties Could Be Forced To Pay $300 Million To Cover COVID-Era Program
-
Uncategorized2 weeks agoApparel Retailer Express Moving Toward Bankruptcy
-
Uncategorized3 weeks agoIndustrial Production Decreased 0.1% in January
-
International1 day agoWalmart launches clever answer to Target’s new membership program
-
Uncategorized3 weeks agoRFK Jr: The Wuhan Cover-Up & The Rise Of The Biowarfare-Industrial Complex
-
Uncategorized3 weeks agoGOP Efforts To Shore Up Election Security In Swing States Face Challenges