United States-based companies ranging from American Eagle to United Airlines are set for a tepid start to the year as the fast-spreading Omicron variant threatens to slow the fragile rebound in growth by exacerbating supply chain problems and labor shortages, Reuters reported.
The roll-out of COVID-19 vaccines and easing of restrictions last year had promised to be a boon for companies looking to recover from the heavy toll that the pandemic had taken on them, it said.
But the fast and relentless surge of Omicron-related infections has once again put sales and profits of companies under pressure.
Staffing, customer traffic and store operating hours have been hampered as the daily infections in the United States touched 1.35 million, the highest in the world.
The first signs of its impact on Corporate America is the hit to sales over the recent weeks seen by companies such as American Eagle Outfitters, Abercrombie & Fitch and Lululemon Athletica.
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.
Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
"Time to perhaps buckle your seat-belts as a bumpy end to the fourth quarter and uncertainty surrounding supply chain and anniversarying stimulus impacts in the first quarter are likely to make the next few months volatile," MKM Partners analyst Roxanne Meyer said.
The US travel industry, a sector that has barely been able to get back on its feet, too has been jolted by staff shortages forcing cancellations of flights and cruises during the crucial holiday.
American Airlines Group Inc. expects cost per available seat mile to be up 13 percent to 14 percent compared to pre-pandemic levels, while United Airlines said it was reducing near-term flight schedules as about 3,000 employees have tested positive for COVID-19.