Omicron surge puts the brakes on recovery of U.S. companies

Reuters

Published Jan 11, 2022 08:32AM ET

Updated Jan 11, 2022 02:30PM ET

By Uday Sampath Kumar and Praveen Paramasivam

(Reuters) - U.S. 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.

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.

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 (NYSE:AEO), Abercrombie & Fitch and Lululemon Athletica (NASDAQ:LULU).

"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 U.S. 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.