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Business Report: Coronavirus Impact, Pier 1 Closures, USC’s New Tuition Deal

The University Village area of the University of Southern California in Los A...

Credit: Associated Press

Above: The University Village area of the University of Southern California in Los Angeles, Tuesday, March 12, 2019.

KPBS Evening Edition anchor Maya Trabulsi and BottomLine Marketing co-founder and SDSU marketing lecturer Miro Copic discuss some of the week’s top business stories.

Q: The coronavirus outbreak in China is still affecting global business, including one of the world's biggest companies. Tell us how the coronavirus is affecting Apple?

A: Apple announced this week that their second-quarter revenues are going to be severely impacted because of China. They gave a big range of, you know, from $63 to $67 billion, which is very unusual for a company that can forecast down to the dollar. These factories have been closed for four weeks. They've closed all the Apple I-stores.

It's amazing how reliant Apple is on Chinese consumers. Last week was the first week that some of these stores reopened on a partial schedule because in a lot of this area in China, where there's over 250 million people that are under restrictions, they can't travel, they can't leave their homes. No one's going into the stores. So Apple is in a tough position as a company.

Now, what's interesting about this is that investors, even though it seems challenging and it's going to challenge companies like General Motors as well... the market really didn't react very negatively to it. Stock has been down about 4% since last Friday. And because Apple is doing so well in so many different areas, as we know right now, the reports are challenging. Seventy-five thousand cases as of this week. Twenty-three hundred deaths. There's still a 3% mortality rate. So there may be greater repercussions. And that's going to impact not just Apple, but a lot of other companies. Wait-and-see situation.

Reported by Maya Trabulsi

Q: OK, let's talk about another major brand. Pier 1 imports closing their stores in San Diego. Tell us about that?

A: Yeah, Pier 1 declared bankruptcy this week. This is part of this whole retail apocalypse that we've been discussing numerous times. But they're going to close 450 out of 500 stores, 90% of their stores nationwide. They've been closing stores for the last couple of years, almost 400 of them.

You know, Pier 1 is one of those interesting companies. They're very unique in the home goods area. They have this kind of exotic furniture, rattan furniture that's inspired by designs in Southeast Asian India. But what they found over the last few years, even though they've remodeled stores, they've done interesting marketing campaigns, is that both the online retailers like Wayfair and Amazon and even traditional retailers like Wal-Mart and Target have really improved their selection of home goods. So their reason for being has been very compromised. In San Diego, they're going to close four of 11 stores, so seven stores will still remain open. So Southern California is actually a fairly good market for Pier One.

But the scary thing about this whole retail apocalypse is that since the beginning of the year, over a thousand stores have closed down last year. Ninety-three hundred closed down. That's at a rate of about 750,800 a month. We're already well ahead of that. It's going to be a challenge in 2020.

Q: And some interesting and some exciting news for some coming out of one of the top universities in California, USC, which is actually where you went to school. Tell us about this new rule?

A: Well, you know, USC has done something that's very important. They've eliminated tuition requirements for families earning $80,000 or less. So they're targeting really that low- and middle-income students that really would love the opportunity to attend USC. And it just removes the financial obligation from them. USC tuition is...very high - $57,000 a year. And if you want to just go for room and board, you're pushing $80,000. Not a lot of families can afford that, especially low- and middle-income families.

The other thing that USC has done, which Stanford did earlier this year, is that they've eliminated home equity as part of the financial aid calculation. So this really impacts a lot of families. But one interesting thing is these schools, they have very large endowments. You know Harvard's is over $40 billion. Stanford's is close to $28 billion. And USC is $6 billion. If you just got a 5% percent return on USC's endowment of $6 billion, you can give free tuition to every incoming freshman for the fall 2020 year.

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