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Global sweeping restrictions on public life have been in effect for over a month now, leaving more than one-third of the planet’s population in lockdown with no end in sight. As food consumption shifts from out of the home into the home, the Food & Beverage industry is reeling.
While it’s too soon for affected companies in the Food & Beverage industry to report against the full impact of COVID-19, we’re seeing trends emerge across supplier’s Earnings Calls, 8Ks, and Conference Transcripts.
- Overall, companies in F&B are bracing for the impact of closures and lower demand in affected regions by taking out loans to maximize flexibility and liquidity
- However, some companies saw demand start to return in China in late February, and feel that the worst has passed
- Food & beverage distributors are seeing global declines in Foodservice-related sales but increases in overall business based on rising consumer demand
Here are the highlights.
[Note: We are updating this post and our compilation post daily to reflect the most recent commentary. Last updated 4/13]
Costco Wholesale Corp Sales and Revenue Call (4/8)
March sales were significantly impacted by the COVID-19 pandemic. The initial response to the pandemic led to significant sales and traffic increases in our warehouses as we disclosed last month's concerning sales in the last week of February. Those increases extended midway through the March reporting period. Around that time and part in response to government actions, we began implementing operational changes. One example is limiting the number of individuals allowed in our warehouses at any given time depending on local requirements…
These developments slowed sales as compared to the first half of March.
Starbucks Corp 8K (4/8)
The actions we took in China, beginning in late January, contributed to the steady business recovery we are experiencing, with over 95% of our stores now open, though many are operating with reduced hours and limited seating in compliance with local guidelines. We are encouraged to see similar improvements underway in South Korea, which reinforce both the resilience of our brand as well as our success in replicating our recovery model across markets as people are able to return to their daily lives and work.
Our March 5 letter shared evidence of the China recovery that began in late February. That recovery continued at a slightly faster pace through the month of March, where comparable store sales declined by 64% compared to a 78% decline for the month of February. Each week, we see more evidence reinforcing our belief that the business will fully recover over the next two quarters. For example, in the last week of March, comparable store sales declined by 42%, representing not only the seventh consecutive week of sequential improvement but also the approximate midpoint of recovery from a weekly low of -90% in mid-February.
Additionally, as the recovery in the market continued, a return to in-store transactions was reflected in the mix of mobile orders which accounted for approximately 27% of China’s sales mix during the last week of March, down from approximately 80% in the last week of February. While all of these trends are positive and we are optimistic they will continue, future progress may not be linear and will be impacted by prevailing, external conditions and local safety guidelines.
With a shortfall of approximately $400 million compared to our expectations prior to the emergence of COVID-19, China’s revenue underperformance in Q2 was at the lower end of the projected range we outlined in our March 5 letter. This underperformance was driven by a 50% decline in comparable store sales for the quarter, primarily due to temporary store closures, reduced operating hours and severely reduced customer traffic during the period.
While the impact of COVID-19 delayed store opening plans in China, development activities resumed towards the end of Q2 with the opening of two new stores in late March, including a Starbucks Now store in Shenzhen. Our recovery plan is working and delivering results.
U.S. Sales Trends in Q2
Building on one of the most successful holiday quarters in the history of Starbucks, the momentum in our U.S. business continued through most of Q2. Quarter-to-date through March 11, U.S. comparable store sales growth was 8%, with comparable transaction growth of 4%. These were the strongest top-line results that we had delivered in four years—and when coupled with very strong margin performance, demonstrate the overall strength of the Starbucks brand and the continued effectiveness of our key growth and margin-improvement strategies, prior to the business disruption resulting from the spread of COVID-19. We expect these same strategies will further lift our sales and margins as we emerge from the current crisis and that the business will recover over time, substantiated by what we are seeing in China.
Comparable same store sales in the U.S. began to decline on March 12 and steadily worsened as we temporarily closed more stores and traffic slowed in response to the rise in “shelter-in-place” mandates and “social distancing” requirements across the country. During the last week of the month, comparable store sales declines stabilized in the range of -60% to -70%, with 44% of U.S. company-operated locations operating, most under modified store hours, primarily through the drive-thru channel. At quarter end, 58% of U.S. company-operated stores were drive-thru locations, of which 76% were open; additionally, approximately 55% of U.S. licensed stores remained open at quarter-end, the vast majority of which were in grocery stores. Notwithstanding the very strong performance for the first ten weeks of the quarter, comparable store sales in the U.S. were down approximately 3% in Q2 versus the prior year, reflecting the very rapid onset of COVID-19 business impacts in the final three weeks of the quarter.
It is important to note that because the impact of COVID-19 on our business is expected to be temporary in nature, stores that were in our comparable store sales base but were temporarily closed as a result of the outbreak remain in the base and are included in our comparable store sales metrics, including those discussed above in relation to the U.S. and China.
McDonald’s Corp PR (4/8)
Our January and February global comparable sales were strong in most countries. Beginning in mid-March, we experienced a significant decline in our results that varies across markets. The variation reflects the different levels of consumer behavior and government response. The situation remains fluid, and as the duration and scope of COVID-19 continues to evolve, it is not possible to estimate the full extent of the impact on our business at this time.
Darden Restaurants 8K (4/7)
Given continued economic uncertainty arising from COVID-19, the Company announced today that it has entered into a $270 million term loan credit agreement to maximize financial flexibility and further bolster liquidity as a precautionary measure. The term loan was fully drawn on April 6, 2020 and matures on April 5, 2021, and carries a current interest rate of LIBOR + 300 basis points. The agreement also includes a provision allowing the Company to request an increase of up to $100 million in borrowings at the election of existing or new lenders.
Bank of America, N.A., served as administrative agent for the new term loan credit agreement. Additionally, BofA Securities, Inc. and U.S. Bank National Association served as joint lead arrangers and joint bookrunners, U.S. Bank National Association served as syndication agent and Truist Bank served as documentation agent.
Kraft Heinz Company PR (4/6)
The Company's growth has accelerated in the wake of very strong consumer demand for its products and trusted brands, despite significant declines in Foodservice-related sales around the world. Net sales are now expected to increase approximately 3 percent and Organic Net Sales (1) are expected to increase approximately 6 percent. The difference between expected net sales and Organic Net Sales is primarily attributable to prior year divestitures and currency impacts. This compares to previous expectations for a low single-digit rate of decline in Organic Net Sales versus the prior year.
At the same time, the Company does not expect the full benefit from incremental sales in the quarter to flow through to net income/(loss) from continuing operations, Adjusted EBITDA (1) , or earnings per share due to added expenses to meet this accelerated growth in addition to headwinds previously disclosed in its February earnings call.
Constellation Brands Inc Earnings Call (4/3)
Our production facilities in the US, Mexico, Italy, and New Zealand are operational, and our distributors are up and running. Our teams are also working hard to ensure our distributor and retail partners have ample supply of our products to meet consumer demand, particularly in the off-premise, which has seen accelerated growth as many restaurants and bars have suspended dine-in services to help mitigate spread of the virus.
The off-premise channel represents 85% to 90% of depletion volume for both our Beer and our Wine & Spirits businesses and over-indexes to the rest of the beverage alcohol industry in the US versus the on-premise channel. These trends are reflected in recent IRI data ending 3/22 which shows accelerating consumer takeaway trends in off-premise channels. Specifically, we've seen IRI dollar sales growth for our Beer business increase to 24% in the four-week period ending 3/22 versus 12-week and 52-week trends of 17% and 12%, respectively.
For our Wine & Spirits Power Brands, we're also seeing accelerating growth of 23% in the latest 4-week period versus 12 and 52-week trends of 7% and 4%. During this time, we are focused on the channels the consumer is choosing, namely, three-tier e-commerce, direct-to-consumer and the off-premise, especially big-box grocery, mass and club channels, where we are working diligently to ensure high-end stock positions for our key SKUs.
We've also adjusted our marketing approach to ensure our consumer messaging is in tune with current realities and by shifting our focus to digital and social media platforms, as sporting events and other major gatherings are suspended. Bottom line, we are well-positioned to continue meeting the needs of consumers as well as our retailer and distributor partners.
Restaurant Brands International Inc 8K (4/2)
The global crisis resulting from the spread of coronavirus (COVID-19) has had a substantial impact on our global restaurant operations. We cannot estimate the duration or negative financial impact of the COVID-19 pandemic on our business, however, depending on the duration and scope, we expect it could be material.
In North America, substantially all of our restaurants remain open, however operations are primarily limited to Drive-thru, Takeout, and Delivery (where applicable). In Latin America, some markets have closed most restaurants and the restaurants that remain open across the region may have limited operations including Drive-thru, Takeout and Delivery. In Europe, the Middle East and Africa, several major markets including Italy, Spain, France and the United Kingdom have closed restaurants, and the restaurants that remain open across the region may have limited operations including Drive-thru, Takeout and Delivery. In Asia Pacific, some markets have closed most restaurants and the restaurants that remain open may have limited operations including Drive-thru, Takeout, and Delivery. In China, we noted in February 2020 that approximately half of our restaurants were temporarily closed. Currently, more than 90% of our restaurants in China are once again open with comparable sales that have improved but remain lower than prior to the coronavirus (COVID-19) pandemic.
While it is premature to accurately predict the ultimate impact of these developments, we expect our results for the quarter ended March 31, 2020 have been significantly impacted and that these adverse impacts will continue beyond March 31, 2020. We currently estimate that comparable sales for the three months ended March 31, 2020 against the prior year period declined by a percentage in the mid-single digits for Burger King, declined by a percentage in the low double digits for Tim Hortons and grew by a percentage in the low twenties for Popeyes. We currently expect that the COVID-19 pandemic will impact our comparable sales and results of operations for the three months ending June 30, 2020 more significantly depending on the duration and scope of the impact of the COVID-19 pandemic.
Kroger Co PR (4/01)
After experiencing strong sales in February, the COVID-19 pandemic triggered a significantly greater lift in sales across both physical retail stores and digital channels in March. Customers shop with Kroger in times of uncertainty because it is a brand they trust. In addition, Kroger has made significant investments for several years to enhance the seamless ecosystem for customers. As customers look for more digital solutions during the pandemic, Kroger is well-positioned to support them with pick-up, delivery and ship to home solutions. To advance operations and support the accelerated sales growth, the Kroger family of companies is making investments in its workforce, associate and customer safety, and the supply chain.
Kroger leadership is closely monitoring the impact of the pandemic on food retail across global markets. From early observations, Kroger is seeing trends similar to other markets affected by the pandemic. The Kroger family of companies started to see a significant shift in customer behavior during the last few days of February as shoppers started stocking up. Sales sharply accelerated in March with identical retail supermarket sales without fuel up approximately 30 percent. This was driven by dramatically heightened demand in the middle of the month as customers were stockpiling, which then tapered, but remained higher than normal in the final week, as customers adjusted to the new dining, work and travel restrictions. The demand has been broad based across grocery and fresh departments. It is too early to speculate what will emerge as the “new normal” in food consumption at home or what the impact on sales will be in future periods.
Conagra Brands Inc Earnings Call (3/31)
From the second week of our fiscal fourth quarter-to-date, we've experienced the unprecedented impact of COVID-19 as consumers have stocked up on food and shifted rapidly to eating more at home…
I can tell you that we expect to exceed our prior full year guidance for total company sales and profit metrics, assuming the end-to-end supply chain continues to operate effectively.
With respect to our results, the magnitude of the impact is difficult to predict. What we know to date, the Q4 retail demand surge is significant and spans multiple retail channels, including e-commerce. While our Foodservice segment is facing headwinds, that impact is more than offset by increased demand in our retail segments.
McCormick & Co Inc Earnings Call (3/31)
First, as we mentioned at CAGNY, the significant disruption in China's consumption in the first quarter impacted our results. The events in China during the second half of the quarter were extraordinary. While total McCormick sales follow a seasonal pattern with the first quarter generally the lightest, the first quarter is typically our peak season in China.
Additionally, over half our China business relates to away-from-home consumption. And Hubei Province is one of our most highly developed regions due to the DaQiao brand being founded and made in Wuhan. This made the China lockdown with an extended lockdown in Hubei, coupled with no opportunity for consumers to stock their pantries to be a significant impact.
We believe we cannot use the China results to extrapolate the overall impact for the rest of the company due to differences related to lockdown durations, pantry stocking opportunities as well as the different percentages of foodservice business and other dynamics in each region. The disruption in China resulted in a 3% reduction in total company first quarter sales and reduced our total consumer and flavor solutions segment sales 5% and 1%, respectively…
Currently, during the early stages of recovery in China, we are seeing increased cooking at home and a surge in consumer retail demand, both in stores as well as through e-commerce and the start of a recovery in foodservice as most restaurants and caterers reopen and consumer confidence gradually builds. We expect China's results to be significantly impacted in the second quarter as well as the market begins to recover gradually. The lockdown in Hubei continued through March and as recently announced is expected to be lifted in April.
For the year, we expect lower China sales from the COVID-19 impact will reduce our total net sales growth by 1% to 2%. And as I already mentioned, we currently believe COVID-19 impact in China cannot be extrapolated to the overall COVID-19 impact for the rest of the company.
Turning to the current status of our major markets outside of China, our presence in China afforded us the insight of seeing how COVID-19 scenarios can unfold as well as to take early action. Our supply chain business continuity plans have been in effect since January. We have assessed and implemented continuity plans to provide customers with continued supply.
To-date, there has been no material impact on supply for most of our sourced materials and for those impacted continuity plans have been activated. We are partnering with our customers to monitor and respond to changes in consumer demand. We're seeing increased consumer consumption both through our scanner data and e-commerce as well as through customer orders, including those from packaged food companies in our flavor solutions segment. While this increase is impacted by short-term pantry stocking, we expect some level of elevated demand for at home cooking to continue. Schools are closed, people are staying at home, and that contributes to real incremental at home consumption.
We also know from our sales performance during recessionary periods, we benefit from consumers eating at help. Our constant currency total consumer segment organic sales growth in 2001 and 2009 was 4% and 3% respectively. On the other hand, in the away-from-home part of our flavor solutions segment, which represents approximately 20% of our total company sales, we are now seeing reduced demand from our foodservice customers as COVID-19 measures have eliminated in dine-in services and limited restaurants to carry out our delivery-only. We expect this will have a significant negative impact on our near-term performance, particularly in our EMEA region, as more people stay at home and away-from-home options remain limited.
Conagra Brands Inc 8K (3/31)
To-date in the fourth fiscal quarter, the Company has experienced significantly increased demand in its retail businesses, associated with the COVID-19 pandemic; the Company has also begun to experience declines in foodservice demand… The Company now expects to exceed prior full-year guidance for total-company sales and profit metrics, assuming the end-to-end supply chain continues to operate effectively.
While we are still early in our fourth quarter, we have seen significantly elevated demand for our retail products as consumers have started filling their pantries for more at-home eating. On a quarter-to-date basis, shipments and consumption in our domestic retail business have increased approximately 50%, which have more than offset the impact of worsening trends in our foodservice business. Our teams have remained agile in responding to the elevated demand, and our supply chain has performed extremely well to fulfill customer orders.
Domino’s Pizza Inc 8K (3/30)
Across our international business, the unique circumstances in a number of markets have necessitated the temporary closing of stores. We continue to stay in contact with the master franchise companies operating these affected stores and look forward to them reopening as soon as possible. China was our first market to be significantly impacted by COVID-19, and we were pleased to see our sales there recover and accelerate in the last few weeks of the first quarter.
Liquidity and Use of Cash Update
Given the market uncertainty arising from COVID-19, subsequent to the end of the first quarter, the Company took a precautionary measure and borrowed the remaining availability of $158 million under its outstanding variable funding notes to improve its already strong cash position. These borrowings, along with the Company’s estimated current unrestricted cash as of the end of the first quarter, provide the Company with more than $300 million in cash on hand to provide enhanced financial flexibility.
Restaurant Brands International 8K (3/30)
We have drawn approximately $1 billion under our existing revolving credit facility, which matures in October 2024. These amounts may be prepaid at any time without penalty. While we believe we had sufficient liquidity to fund ongoing operations and meet our obligations, we chose to further enhance our cash position and financial flexibility in light of uncertainty in financial markets related to the coronavirus pandemic. These funds, combined with our existing cash balance, resulted in a cash position of approximately $2.5 billion as of March 27, 2020. The current interest rate for borrowings under the revolving credit facility is LIBOR plus 1.25%.
Yum Brands 8K (3/30)
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On March 29, 2020, YUM! Brands, Inc. (the “Company”) and David W. Gibbs, Chief Executive Officer of the Company agreed to changes to his base salary. Effective March 30, 2020, Mr. Gibbs has voluntarily elected to forgo all salary compensation for the balance of 2020. The Company will redirect his forgone salary to assist with funding two efforts: (1) one-time $1,000 bonuses to the Company’s nearly 1,200 Restaurant General Managers at KFC, Pizza Hut, Taco Bell and The Habit Burger Grill to acknowledge their efforts managing teams and business continuity affected by COVID-19; (2) the Yum! Brands Foundation Global Employee Medical Relief Fund which will provide financial hardship grants to those directly impacted by COVID-19, including company and franchise restaurant employees with a COVID-19 diagnosis or who are caring for someone with a confirmed diagnosis, as well as other front-line workers and those facing food insecurity. Yum! intends to grow this medical relief fund through voluntary donations.
Sysco Corp 8K (3/30)
The COVID-19 pandemic has resulted in disruption to demand for food-away-from-home and to the foodservice industry. As Sysco Corporation (“Sysco,” “our,” “us” or “we”) faces the challenges associated with the pandemic, our focus is on the well-being of our associates, customers, suppliers, and communities during this unprecedented time. As a critical infrastructure provider, Sysco plays an important role in the food supply chain in the geographies where we operate, and we continue to provide products and services to our restaurant, healthcare, and government customers. While in-location dining at restaurants in some areas is limited or closed, many restaurant customers remain open with drive-through, takeout and delivery service capabilities. The continuing impacts of the COVID-19 pandemic will result in a short-term decrease in sales to Sysco.
Molson Coors Beverage Co 8K (3/27)
On March 27, 2020, Molson Coors Beverage Company (the “Company”) announced that it is withdrawing, in its entirety, its financial outlook for 2020 and beyond that the Company previously provided on February 12, 2020 due to uncertainty regarding the impact of COVID-19 pandemic.
Attached as Exhibit 99.1 is a copy of a news release of the Company, dated March 27, 2020, relating to the withdrawal of guidance. Such information, including the Exhibit attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 8.01 Other Events.
Also, in light of the rapidly evolving COVID-19 pandemic, the Company is also filing this Current Report on Form 8-K to supplement the risk factors described in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. The following risk factor disclosure should be read in conjunction with the risk factors described in the Annual Report on Form 10-K, which may be further impacted by the COVID-19 pandemic.
The novel coronavirus (COVID-19) pandemic, efforts to mitigate or disrupt the pandemic and related weak, or weakening of, economic or other negative conditions, may disrupt our business, which could have a material adverse effect on our operations, liquidity, financial condition and financial results.
The Hershey Co 8K (3/25)
At the time of our 2019 Form 10-K disclosure regarding COVID-19 (included within Management’s Discussion and Analysis of Financial Condition and Results of Operations), we believed this outbreak would be limited to our China business. However, policies and initiatives to reduce the global transmission of COVID-19 have significantly increased. These initiatives include reduced or eliminated food services, reduced travel, the closure of retailing establishments, the cancellation of major sporting and entertainment events, the promotion of social distancing and the adoption of remote working policies. In response to the COVID-19 pandemic, the Company has temporarily closed its Hershey’s Chocolate World stores in Hershey, Pennsylvania, New York City and Las Vegas, Nevada.*
The COVID-19 pandemic is a highly fluid situation and it is not currently possible for us to reasonably estimate the impact it may have on our financial and operating results. We continue to monitor the situation and expect to provide additional details during our first-quarter 2020 earnings call.
McDonalds Corp 8K (3/25)
The global pandemic resulting from the outbreak of the coronavirus (COVID-19) has disrupted McDonald’s global restaurant operations. Our primary focus and attention remains directed towards the wellbeing and safety of restaurant crew, franchisees, suppliers and employees.
We continue to work with franchisees around the world in order to evaluate operational feasibility and support financial liquidity (e.g. rent deferrals) during this period of uncertainty. We are also working closely with suppliers on contingency planning for continuous supply so that we can continue to operate safe restaurants.
As we cannot predict the duration or scope of the COVID-19 pandemic, the negative financial impact to our results cannot be reasonably estimated, but could be material. We will provide an update during our first quarter 2020 earnings release and call.
Yum Brands Inc 8K (3/24)
On March 24, 2020, the Borrowers borrowed $525 million under the Revolving Facility. While the Company believes that it had sufficient liquidity prior to taking this action to fund its operations and meet its obligations, the Company has further increased its cash position as a precautionary measure in order to preserve financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 pandemic.
The COVID-19 pandemic continues to impact the operations of our restaurants in numerous markets across the world…
We and our franchisees have also experienced significant store closures and instances of reduced store-level operations that have resulted in reduced operating hours and dining-room closures. In markets where governments have imposed restrictions on travel outside of the home or where customers are practicing social distancing, restaurant traffic has also been significantly impacted. As of the date of this filing we have approximately 7,000 restaurants around the world that are currently closed, including over 1,000 Pizza Hut Express units in the U.S. and over 900 KFCs in the UK. In some markets, such as the U.S., restaurant operations are limited to drive-thru, delivery and carryout options.
The impact on our sales within a market has depended upon the severity and duration of the outbreak, as well as that market’s reliance on dine-in sales. Importantly, we have seen early signs of sales recovery in markets that were first impacted by COVID-19, although there can be no assurance of continued improvement. As of the date of this filing we currently estimate our same-store sales for the quarter ended March 31, 2020 will decline in a range of mid to high single digits. Because this situation is ongoing and because the duration and severity are unclear it is difficult to forecast any impacts on the Company’s future results. However, we currently expect COVID-19 to impact our same-store sales for the quarter ended June 30, 2020 more significantly than it is impacting the current quarter due to the increasing number of markets currently impacted.
Campbell Soup Co 8K (3/24)
The Company announced new support for teams at its manufacturing plants, distribution centers and in-store field-based sales, as they work to ensure neighbors have food during this critical time, including:
- a $2 per-hour premium payment for hourly employees at all of the Company's production facilities and distribution centers; and
- a $100 per-week premium payment for front-line supervisors, certain site staff and depot managers who are reporting to work as essential infrastructure workers. This incentive also includes employees who oversee the Company's sales execution teams that are in stores and working with customers and independent distributors to ensure that store shelves are stocked.
These premium payments will be extended to approximately 11,000 front-line team members who make, sell, and distribute products to retail customers across the country. These temporary benefits, implemented in response to the COVID-19 pandemic, will be in place for at least five weeks beginning March 29.
These actions are in addition to a number of steps the Company has already taken to ensure the well-being and safety of its teams, including protocols for identifying potential employee exposure, quarantines, enhanced cleaning procedures and health screenings across the Company's network. The Company has also implemented policies to help manufacturing and distribution employees who may be out of work due to caregiving or health-related issues related to the coronavirus, including mitigation plans to bridge income if necessary.
Post Holdings Inc 8K (3/24)
On March 23, 2020, the Company borrowed $500.0 million under the Revolving Credit Facility. The Company borrowed under the Revolving Credit Facility as a precautionary measure in order to increase its cash position and its financial flexibility in light of the uncertainty resulting from the recent coronavirus (COVID-19) outbreak. The proceeds under the Revolving Credit Facility may be used for working capital, general corporate or other purposes as permitted by the Revolving Credit Facility. Prior to such borrowing, the Company had $21.9 million of letters of credit outstanding and no other amounts outstanding under the Revolving Credit Facility.
The Kraft Heinz Company 8K (3/24)
As of December 28, 2019, no amounts were drawn on the Company’s Senior Credit Facility. On March 12, 2020, the Company provided notice to its lenders to borrow the full available amount under its Senior Credit Facility so that a total of $4.0 billion is currently outstanding. This action was a precautionary measure to preserve financial flexibility in light of the current uncertainty in the global economy resulting from the novel coronavirus pandemic (“COVID-19”).
Coca-Cola Co 8K (3/20)
Since our last guidance update, local market policies and initiatives to reduce the transmission of COVID-19 have significantly increased. These initiatives include the direction to refrain from dining at restaurants, the cancellation of major sporting and entertainment events, material reduction in travel, the promotion of social distancing and the adoption of work-from-home policies. These initiatives, in combination with the latest movements in foreign exchange rates, will have a negative impact on our full year financial and operating results and, therefore, we do not expect to achieve our previously provided full year guidance.
Due to the speed with which the COVID-19 situation is developing, there is uncertainty around its ultimate impact; therefore, the negative impact on our financial and operating results cannot be reasonably estimated at this time, but the impact could be material. We expect to provide an update during our Q1 2020 earnings release and call.
J.M. Smucker Co 8K (3/19)
We understand the importance of providing a steady supply of food for consumers and their pets, particularly in uncertain times like these. That’s why we are acting quickly and aggressively. Some of the key steps we are taking include:
- Leveraging our relationships with suppliers to maintain a consistent supply of ingredients and packaging materials
- Maximizing the production capacity at our manufacturing facilities and increasing the number of appointments at our distribution centers
- Prioritizing production of our most demanded items
- Working with federal and local government officials to ensure they understand the importance of allowing us to continue supplying you with products
- Ensuring our employees have the appropriate support to react quickly to mitigate anything that could impact our ability to meet customer and consumer needs
We are working closely with all our logistics partners to minimize any material negative impact but note the following short-term issues we are actively working to address:
- Due to increased demand, core service metrics (case-fill and on-time delivery) may be lower than traditional levels.
- Steps are being taken to smooth order volume, which could result in orders being shifted out 4 – 6 days. Communication will be provided to customers whose purchase orders are impacted by this potential change.
- We are doing our best to meet committed quantities but at times product may not be in the most efficient location within our network. Our teams are working diligently to ensure product is deployed appropriately to support our commitments.
- Transportation capacity is starting to become constrained in the Northeast and Western parts of the United States, which could impact timeliness of future deliveries.
Darden Restaurants Inc 8K (3/19)
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
As previously disclosed, on October 27, 2017, the Company entered into a Credit Agreement (the Credit Agreement) with Bank of America, N.A., as administrative agent, and the lenders (the Lenders) and other agents party thereto. Pursuant to the Credit Agreement, the Lenders provide the Company with a revolving credit facility of $750 million subject to certain terms and conditions. The other material terms of the Credit Agreement were described in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 1, 2017.
On March 17, 2020, the Company provided notice to the Lenders that the Company would borrow the full $750 million available under the Credit Agreement. The Company borrowed under the Credit Agreement to secure its liquidity position and provide financial flexibility given uncertain market conditions as a result of the COVID-19 outbreak. The Company may use the proceeds from the Credit Agreement borrowing for working capital, ongoing operating needs and general corporate purposes.
Starbucks Corp Annual General Meeting (3/18)
And today, over 90% of Starbucks stores in China are open, under modified hours and conditions, all offering some degree of connection and all allowing partners in China to do what they love: practice their craft and connect with customers over coffee.
General Mills Earnings Call (3/21)
Thanks, Jeff, and good morning, everyone. Our key messages today are listed on Slide 4. But before we cover our execution against fiscal '20 priorities, our Q3 results and our updated outlook given this extraordinary period of time, I'd like to take a minute to discuss what we're seeing with respect to the COVID-19 virus outbreak and share what General Mills is doing to address our most important objectives, which are the continued health and safety of our employees and our ongoing ability to serve consumers around the world.
For the past 154 years, General Mills has played a critical role in making food to meet the needs of our consumers. And in recent weeks, I could tell you that I'm proud of the way we partnered with our retail customers to address the increased demand for food at home.
We are taking steps to flatten the curve and limit exposure to the virus while continuing to safely operate our business. We've asked all of our employees to partake in social distancing practices, and we've required those who can to work from home through at least April 1st. For the safety of all involved, we've also restricted business travel and visitors at our facilities.
With that in mind, Slide 5 summarizes how COVID-19 has impacted our business in recent weeks and what we expect to see in the coming months. As we mentioned last month at CAGNY, nearly half of our Häagen-Dazs shops in Greater China had been temporarily closed. In total, we saw a 90% decline in traffic in shops and substantial declines in other Foodservice outlets in China in February, resulting in a significant reduction in Häagen-Dazs sales in Asia for the month. This was a 50 basis point headwind to total company organic net sales growth and an estimated 150 basis point headwind to adjusted operating profit and adjusted diluted earnings per share growth in the third quarter.
As the virus continues to spread, we expect to see reduced consumer demand for away-from-home food in the near term, impacting both our Asia and Latin America and Convenience Stores & Foodservice segments. In Asia, while most of our shops are now open again, many have reduced hours in service, and store traffic is still down roughly 60% during the month of March. At the same time, we expect to see greater near-term demand for Food at Home primarily impacting our North America Retail and Europe & Australia segments.
While it is still early, we've seen increased customer orders and higher retail sales takeaway in Nielsen-measured channels since the beginning of March. Our U.S. retail sales results for the week ended March 7th were up low double digits, including Pet, and we anticipate takeaway for the week ending March 14th will be many times higher across all channels.
While we assume this short-term stock-up demand will ebb in the coming months, our expectation is that overall at-home food demand will remain elevated in Q4, and the bulk of any unwind will happen in fiscal '21. There is a great deal of uncertainty in this component of our forecast, and if we see a material change in outlook, we will provide an update before the end of the fiscal year.
Importantly, our supply chain is operating effectively around the world. And we've been able to service the vast majority of customer demand to date. Our outlook assumes we continue to operate our supply chain with minimal disruption, but this could change if the virus situation worsens materially. Given this heightened level of uncertainty regarding COVID-19, our full year guidance, that Kofi will cover in a few minutes, reflects a wider range for sales, profit and EPS than we would typically carry with just 1 quarter remaining in the year.
Alimentation Couche-Tard Inc Earnings Call (3/18)
But before I turn to the results of the quarter, I want to discuss how COVID-19 is impacting our operations and our business to date.
As you all know, this is a very fluid and uncertain situation. With the size of our global network and the millions of customers we interact with every day, we have enacted emergency procedures and preparations knowing each of our regions and business units will need to take additional measures deemed necessary to protect our people and our customers as we attempt to limit further spread of the virus.
At all times, we're following the advice of local and global health authorities and putting the health and safety of our employees and our customers at the forefront of our decision-making. All of our support center teams are hard at work to keep our businesses operating and assist our stores and customers. A good portion of that office work is now being done remotely to support critical business continuity, such as payroll, IT, supply chain ordering and HR support and also to reduce the density at our office locations.
We've issued information for preventative health procedures such as hand washing, proper hand washing as well as strict guidelines for hygiene and cleaning inside our stores and at our pumps to protect our employees and our customers. Perhaps most important for the health of our North American hourly store employees, we've also instituted an emergency sick care plan so that these workers have some financial relief if they need to stay away from work to be tested for COVID-19 or being diagnosed with the virus. We're also carefully assessing our regional workforce capacity and scheduling to keep stores open and operating and serving our customers in this time of crisis.
As we make these necessary contingency plans for business and supply chain continuity, I want to stress that Couche-Tard is in a very strong place to face the financial volatility and headwinds created by the COVID-19. We have good cash liquidity, a very healthy balance sheet and solid contingency plans, which enable us to stay focused on meeting the needs of our people and our customers.
General Mills 8K (3/18)
Our third-quarter results were broadly in line with our expectations, except for the negative impact in Asia of the COVID-19 virus outbreak.
“During the rapidly evolving situation related to COVID-19, our number one objective continues to be the health and safety of our consumers, employees, and other stakeholders. General Mills plays a critical role in making food to meet the needs of our consumers, and I’m proud of the way we’ve partnered with our retail customers in recent weeks to service consumers’ increased demand for food at home during this unique time. Looking forward, we’ll remain agile to adapt to changing demand patterns around the world as circumstances with COVID-19 continue to develop.”
Third Quarter Results Summary
Net sales of $4.2 billion were flat to last year. Organic net sales were also flat to last year, with strong growth for the Pet segment largely offset by declines in North America Retail and Convenience Stores & Foodservice. A modest decline in organic volume was offset by favorable organic net price realization and mix. Third-quarter net sales results versus the prior year included a 50 basis-point headwind from lower Häagen-Dazs net sales in Asia in February, driven by the impact of the COVID-19 virus outbreak on consumer traffic in Häagen-Dazs shops and foodservice outlets.
Gross margin declined 80 basis points to 33.6 percent of net sales. Adjusted gross margin of 33.9 percent was 30 basis points below the prior year, driven by input cost inflation and higher other supply chain costs, partially offset by Holistic Margin Management (HMM) cost savings and favorable net price realization and mix.
Operating profit totaled $651 million, essentially in line with the prior year. Operating profit margin of 15.6 percent increased 10 basis points. Adjusted operating profit of $675 million was down 8 percent in constant currency, primarily driven by higher selling, general, and administrative (SG&A) expenses, including higher media investment. Lower contributions from ice cream net sales in Asia in February reduced third-quarter adjusted operating profit results versus the prior year by an estimated 150 basis points. Adjusted operating profit margin decreased 130 basis points to 16.1 percent.
Net earnings attributable to General Mills totaled $454 million, up 2 percent from a year ago.
Diluted EPS of $0.74 essentially matched prior-year results. Adjusted diluted EPS of $0.77 were down 6 percent from the prior year in constant currency, driven primarily by lower adjusted operating profit, a higher adjusted effective tax rate, and higher average diluted shares outstanding, partially offset by lower net interest expense and higher non-service benefit plan income. Lower contributions from ice cream net sales in Asia in February reduced third-quarter adjusted diluted EPS results versus the prior year by an estimated 150 basis points.
McDonald’s 8K (3/17)
The recent outbreak of the coronavirus has disrupted operations of McDonald’s restaurants in numerous markets around the world. Our primary focus and attention is directed towards the well being and safety of restaurant crew, franchisees, and employees.
In addition, we are working with franchisees around the world in order to evaluate operational feasibility and support financial liquidity (e.g. rent deferrals) during this period of uncertainty. We are also working closely with suppliers on contingency planning for continuous supply.
At this time, neither the duration nor scope of the disruption can be predicted, therefore, the negative financial impact to our results cannot be reasonably estimated. Below is a brief summary of operational impact to McDonald’s restaurants around the world; please note that this does not reflect declines in overall consumer behavior. At a minimum, we will provide an update during our Q1 2020 earnings release and call.
Several governments around the world have declared a State of Emergency and/or closed or partially closed all restaurants. The situation is constantly changing and we continue to work with our local teams on the operational and business impact.
U.S. : Substantially all restaurants are operating Drive-thru, Delivery, & Take-away only; subject to local restrictions, dining rooms are operating at restaurant discretion. Limited hours may apply.
International Operated Markets :
- Most markets, such as France and Canada, have limited operations including Drive-thru, Delivery and/or Take-away; some restaurants within these markets may be closed, have limited hours and/or restricted capacity.
- Several markets, such as Italy & Spain, have closed all restaurants.
International Developmental Licensed Markets : Substantially all restaurants are operating in Japan; China is operating ~95% of restaurants; operating hours in most other countries are driven by government regulations.
Shake Shack PR (3/17)
Pandemics or disease outbreaks such as the novel coronavirus (COVID-19 virus) have and may continue to impact customer traffic at our restaurants, may make it more difficult to staff our restaurants and, in more severe cases, may cause a temporary inability to obtain supplies, increase commodity costs or cause closures of our affected restaurants, sometimes for prolonged periods of time. We have temporarily shifted to a “to-go” only operating model in our domestic company-operated Shacks, suspending sit-down dining. We have also implemented closures, modified hours or reductions in on-site staff, resulting in cancelled shifts for some of our employees. COVID-19 may also materially adversely affect our ability to implement our growth plans, including delays in construction of new restaurants or adversely impact our overall ability to successfully execute our plans to enter into new markets. These changes and any additional changes may materially adversely affect our business or results of operations, and may impact our liquidity or financial condition, particularly if these changes are in place for a significant amount of time.
Pingtan Marine Enterprise LTD Earnings Call (3/17)
The first quarter of 2020 is a difficult time for many companies, including Pingtan that conducted businesses in China due to the coronavirus outbreak. The company has taken active precautionary measures and gradually resumed the work in mid-February to reduce the impact of the pandemic on our production and operations. Although the pandemic has not yet disappeared completely, we remain optimistic about the production and operational activities for the upcoming quarters. Pingtan has been devoted to being a leading supplier of natural seafood and high-quality [protein] in the Chinese market.
As always, Pingtan Marine will keep investors a place (inaudible) development and progress, and we welcome constructive suggestions and effective recommendations.
Reed’s Inc. 8K (3/16)
Anthony V. Vendetti Maxim Group LLC, Research Division: “Yes, I just wanted to start — I know you touched on the coronavirus, COVID-19. You’re not seeing any impact now, but obviously, things could be affected going forward. You mentioned, I guess, some of your ingredients, but not a lot, are sourced from Asia. Can you talk a little bit, though, from the sales perspective? I know that the guidance you’re providing right now is on the brands, correct? It’s just 10% plus on the brand. But it looks like the overall guidance for the year, you’re not reiterating or mentioning at this point. Is that solely due to the uncertainty around COVID-19 or is that just, at this point, not something you want to elaborate on?”
Norman E. Snyder CEO & COO: “More the latter. I’ll say this, we — and all of our forecasts and all of our planning, obviously, this is a recent development, and we haven’t had the time to absorb the full impact. And obviously, it’s a fluid situation with circumstances changing every day, so I think it would be remiss for me to make any sort of comments on that. We obviously are trying to do the best to stay on top of it, but like anybody else we don’t really have any visibility into the future so I’d prefer not to comment on that.”
Coffee Holding Company Inc. 8K (3/16)
“The other reason for the decline in sales during the quarter was the excessive volatility in the green coffee market which caused our green coffee customers to make smaller than normal purchases due to the constant daily price fluctuations. We believe once the volatility in the market subsides, our customers will once again resume their normal buying habits.”
“Other noteworthy events during the first quarter was the new distribution agreement with a large supermarket chain in the Northeast for three of our branded items. This chain has over 150 stores and has begun purchasing our Café Caribe items and two Harmony Bay 40 oz bag items. We also renewed our loan agreement with our lender, Sterling National Bank, for an additional two years at a more favorable borrowing base which we expect will save us approximately $35,000 annually.”
“Lastly, with the recent market volatility caused by the COVID-19 virus outbreak, I want to remind our shareholders that our balance sheet remains extremely strong and we believe our working capital combined with our $14.0 million borrowing base will see us through this event,” concluded Mr. Gordon.
New Age Beverages Corp Earnings Call (3/16)
Answer – David Vanderveen: Thanks, Brent. Yes, I mean, the opportunity right now is to add a lot of value to communities concerned about their health and to attract people who are worried about their finances. And there just isn't -- it's not what we wish for, but it's the reality that we have. And so this is a time when the direct selling segment of our business can really run. And fortunately, we've been working pretty aggressively since I came in, in January and Julie before that to dramatically overhaul the e-commerce part of the business. And also get some of these new tools like our mobile app and which will really help gamify the business for people coming in remotely, in particular, a lot of tools we're using like Zoom and WeChat and different social tools for communication, just makes it easier for us to execute that and for our distributors who are older to get in that as well. I brought some relationships with me and one of them, we have a great new social media team that's just overhauled all of our social platforms and is doing training now with a lot of our older leaders to help them quickly build the skills to be successful on some of those newer social selling platforms that people need to know. And so -- and we're just seeing great results. There's just a lot of excitement and a lot of activity. I was just -- I was surprised to see China do that well in this February versus previous year, given the impact of the coronavirus on that market, and they were right in the middle of, particularly Hubei, Wuhan, we're right in the middle of a lot of the big issues in February with quarantines, and we continued to see good things happening there. So it's going to be a bit of an ugly girl dance, but I think we're going to be the least ugly girl in some of these global pandemics right now. And I think we look relatively positive given that.
Natur International Corp 8K 3/13
Application for a 45-days extension of the filing deadline of the 10-K.
Natur International Corp. (“natur” or the company) seeks an extension of 45 days to file its annual report on Form 10-K, for the fiscal year ended December 31, 2019, based on the SEC Order under Section 36 of the Exchange Act, set forth in Release No. 34-88318, issued March 4, 2020, which authorizes the Commission to exempt, either conditionally or unconditionally, any person, security or transaction, or any class or classes of persons, securities, or transactions, from any provision or provisions of the Exchange Act or any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.
On November 11, 2019, the company announced a merger with Share International, which has its operations in the Peoples’ Republic of China. The closing of this transaction, originally planned for midst of February 2020, is delayed due to the circumstances in China caused by the COVID-19 virus. Share International is currently not able to deliver the closing documents and financial records of its China activities due to illness of some key employees. As this transaction was announced to the public by form of press release on November 11, 2019, the company is obliged to inform the public in its 10-K, as a subsequent event, about the materiality of the transaction and to publish the (unaudited) results of the 4th quarter 2019 of Share International, which are part of the required closing documents. With its head office in the Netherlands and having a Chinese Financial Director, the company itself is also hit by absences of staff due to the effects of the COVID-19 virus, causing a material slow-down of the activities needed to finalize the audited financial statements of the year 2019.
The company expects to file its annual report within the time frame of the extension, on or before May 14, 2020.
Attached is a signed statement from Mr. Zeng Li, the CEO of Share International and the Chinese activities, who is located in Chongqing, PRC, which confirms that due to the illness of several staff members of the local enterprise and the fact that the office was closed in the early part of 2020 and continues to be understaffed, it has not been able to provide the financial information to the company for its completion of its financial reporting.
It is to be expected that the operations of Share International will be negatively impacted due to understaffing, and a significant decrease of consumer demands in Chongqing. We expect that as the Covid-19 Virus expands as a pandemic and state actions are taken that are disrupting commerce at all levels of industry, there will be various adverse effects experienced by companies such as ours that deal in consumer products and services Although the company and Share International are taking measures to mitigate the effect as much as possible there is no assurance that the steps will be sufficient. In most respects it is too early in the pandemic to be able to quantify all the ramifications.
Although the company is confident that filing will take place within the timeline of the extension, this is not a certainty as local in the locations from where require information for our reporting circumstances may change for the worse.
Tyson Foods Inc 8K 3/13
Pandemics or disease outbreaks, such as the novel coronavirus (COVID-19 virus), may disrupt consumption and trade patterns, supply chains, and production processes, which could materially affect our operations and results of operations.
Pandemics or disease outbreaks such as the novel coronavirus (COVID-19 virus) may depress demand for protein because quarantines may inhibit consumption. Restrictions on public gatherings or interactions may also limit the opportunity for our customers and consumers to purchase our products.
The spread of pandemics or disease outbreaks such as the COVID-19 virus may also disrupt logistics necessary to import, export, and deliver products to us or our customers. Ports and other channels of entry may be closed or operate at only a portion of capacity, as workers may be prohibited or otherwise unable to report to work, and means of transporting products within regions or countries may be limited for the same reason.
J&J Snack Foods Corp 8K (3/12)
Pennsauken, NJ, March 12, 2020 - J & J Snack Foods Corp. (NASDAQ-JJSF) announced today that it expects its results of operations to be impacted by the closings and anticipated lower attendance and traffic at many of the venues and locations where its products are sold such as schools, stadiums and arenas , movie theaters , amusement parks and restaurants and by a general slowdown in activity throughout the United States resulting from the effects of the coronavirus (COVID-19). The Company said that it is unable to estimate what the impact may be although it said the impact may be material. The Company stated that its sales at the venues and locations mentioned above is approximately $350 - 400 million annually.
Gerald B. Shreiber, J & J’s President and Chief Executive Officer, commented, “We have and are continuing to develop contingency plans to address and lessen the impact of the effects of coronavirus on our employees, our customers and our overall business.”
Premium Brands Holding Corp Earnings Call (3/12)
Answer – George Paleologou: I think, David, it's safe to say that when we put together the budget, we were facing -- for 2020, we were facing a very inflationary environment with respect to protein. It's no longer the case. I mean, there's been demand destruction, obviously, in China and COVID-19 in North America also -- will also cause demand destruction. So that situation is changed as of today currently. We don't see that changing any time in the near future. So anyway, that's sort of our view today.
Question – David Francis Newman: And if you look at ASF, there was a lot of somewhat manipulation going out into the market with the Chinese, ahead of the lunar year and things like that, which seems to have subsided a little bit. But that certainly must have added to the volatility that's going on in the market on the ASF as well, would you not say?
Answer – William Dion Kalutycz: Well, yes, it certainly was taking supply out of the system because our read of the situation is a lot of suppliers, a lot of processors were putting away product in anticipation of a strong Chinese New Year. Well, as we all know, that did not happen because of COVID-19. Yes. They got caught and that fed into some of the weakness we're seeing now.
Answer – George Paleologou: Don't also forget, David, that a lot of the proteins exported to China are consumed traditionally in the Foodservice segment. And then the Foodservice segment in China has been impacted immensely by COVID-19 as well. So there's been some demand destruction in the Foodservice channel, in particular.
Empire Co LTD Earnings Call 3/12
To date, the coronavirus has not negatively impacted our business, and we are taking all prudent precautions. We will continue to monitor the situation as it evolves and take all necessary actions.
However, beginning on February 28 and accelerating, starting on March 8, we saw overall elevated sales increases clearly attributable to public concerns surrounding the coronavirus. Specifically, we began to notice in many regions of the country that customers were increasing purchases in certain nonperishable categories such as household cleaning supplies, paper products, canned and packaged foods and health and hygiene products.
Sanderson Farms Inc Bank of America Merrill Lynch Consumer & Retail Technology Conference 3/11
Answer – Peter Thomas Galbo: So maybe I'll jump back in here. Joe, you spoke a little bit about food service demand remaining strong at this point. I guess the question just kind of becomes, if food service does begin to fall off because of greater spread of coronavirus, can you just talk about the dynamics and the potential to convert some existing capacity and maybe some of your big bird plants over to retailer tray pack plants, if that's where the demand is going to be?
Answer – Joe F. Sanderson: Well, we've done that before. We recall, a couple of years ago, good to try to get my bearings when we did '18 and then we went back in '19. Yes. We converted Hazlehurst and Hammond from big bird into tray pack because we had some business come our way, about 100 million pounds of tray pack business came our way as we were building Tyler, and we did not want to pass on that business because we knew Tyler would need it. So we converted 2 plants. And that is a doable thing to convert some. You just have to run a lower live weight, pick your weights down about 6.75 from 9.25. And you can do that over time. But I have 5 retail plants that can run some additional pounds of retail weight birds are the parts and what you do is, you take your bird weight down at the Hazlehurst and Hammond, for example, cut those chickens up and ship the parts into the tray pack plants. But you can't -- I don't have enough room. it's old 5 plants to take all of the jumbo birds down, but could do some of that. And then if it fell off enough, what you'd really do is, you have to reduce your slaughter at some of your big bird plants, and euthanize some birds in the field, drop your slaughter down to 50% probably. And you keep your growers and your employees on payroll, just like it was a natural disaster, which we've had at Laurel and which we had up in North Carolina, keep your business intact and weather the storm. But you could shift over part of the birds into retail birds.
Royal Unibrew Earnings Call 3/11
Question – Richard Withagen: I have three questions as well, please. First of all, yes, back on COVID-19, could you please remind us what the split is between on-trade and off-trade in your Italian business? And what kind of measures you have taken in order to help reduce costs or where you can actually reduce costs?
Second question is on Finland. I think we see a continued channel shift in Finland with Alko selling less and other outlets selling more. Do you expect that to continue in 2020? And what are the main commercial initiatives for you in 2020?
And then the last question is on Lorina in France. I've been reading that you've made quite some changes to the management of Lorina in France, the general manager, recently a new marketing manager. Does this mean that the integration is largely done? And what kind of capabilities have you been looking for especially?
Answer – Lars Jensen: If we start with the first question, in terms of Italy. So our beer business in Italy is about 70% out-of-home consumption and 30% at home.
Whereas the soft drink business is close to being the opposite. Since the beer business is bigger than the soft drink business, then we are skewed more to the out-of-home consumption and on-trade.
So if you take the mix of the true, it's in the neighborhood of about 60% of our business that sits in the on-trade business.
Then you asked questions around what kind of measures can we take? I think this is not only something that is isolated about measures in Italy. This is about Royal Unibrew as a group, helping each other and securing that we, as a group, delivers and create flexibility. So we are looking at exactly the same measures as we are looking at if we have a very bad summer, bad weather, what can we do to operate smarter? What kind of cost can we avoid, et cetera, et cetera. And I think the latest example we have goes back to the summer of 2017, which was the most dreadful summer, I think since we start measuring weather in the Nordic scene. So we have, I think, in general, in the organization, we have a pretty good way of dealing with these things in a very agile and proactive way. So this is not only Italy, just to stress that point.
Casey’s General Stores Earnings Call (3/10)
Question – Paul Trussell: So maybe just to circle back on what's happening kind of near term, maybe just give a little bit more detail about the rewards program being such an early success? Maybe give some examples of how you're finding your customers engaging with the app and the behavior that it's driving? And then also just on coronavirus, I mean, like you said, you mentioned you might be a little bit more insulated than others. But just is there anything that you would attribute to coronavirus in terms of any impact to your business so far that you can see?
Answer – Darren M. Rebelez: All right. Well, Paul, this is Darren. I think with respect to the rewards program, we're really happy with how that's been progressing so far on a couple of fronts. One being just the absolute enrollment. And seeing that number move up pretty significantly, nearly 1.8 million members as we sit here today. And that was -- that exceeded our goal for the year already. And so we're resetting targets, and we're seeing that engagement. We're -- the other thing I mentioned in the narrative was that just -- virtually 20% of all of our transactions now have some rewards participation in them. And that also is ahead of where we thought we would be. So the people that have enrolled and that's growing consistently, they are being very active inside of that. So we're -- we like how it's moving so far. And it's giving us a new opportunity to engage with guests in a way that we haven't been able to before. With respect to coronavirus, I -- it's still really difficult to say what that impact is going to be. I guess, I would have to say, in the near-term, prior to this real fall off with crude oil due to the OPEC issue, I would say, that gasoline was starting to come down in cost already based on some demand concerns in the marketplace. We haven't seen any erosion in demand but what we have seen is the reduction in cost. So that's enabled us to continue to grow gallons. At the same time, be able to harvest some margin. So that's probably the most significant impact we've seen so far. But we're on top of this, virtually all day, every day right now looking for anything else to happen. But at this point, we haven't had any other impacts.
BJ’s Wholesale Club Holdings Inc Bank of America Merrill Lynch Consumer & Retail Technology Conference (3/10)
Answer – Robert Frederick Ohmes: Terrific. Thanks, Lee. I'm going to ask the question that I've gotten a lot on -- that you're getting a lot on, just -- I know people want to know if we can get any more thoughts on the stock-ups related to coronavirus and how you guys are thinking about that operationally and pressures on the system? And maybe how you think about what happens when you get beyond that period as well?
Answer – Lee Delaney: Sure. Let me answer it in a few ways. So one is we are taking increased measures to protect our team members and our members either in our kind of home office, distribution or club facilities that includes things like greater hygiene, cleanliness standards, et cetera, which is really important. I think it's something that all retailers can and should be doing.
Two, we're very actively managing the supply chain. As we look at the supply chain today, there's a little bit of risk with long lead time items particularly out of China. We were first worried about goods that hit our clubs in April. There were a couple of dozen SKUs that we weren't sure we would get. As we sit here today, it's down to 2 SKUs that we're not sure we're going to receive, which is a very small risk and de minimis in terms of the impact on the business. As you look to May, you have the same basic size problem. There's a couple of dozen SKUs that we're not sure we're going to receive, but that in terms of overall risk is pretty small. We will just assort other things in the space that is freed up and you'd have some categories where there are articles that we were excited about that we won't have. But out of 7,000 articles in the building, 25 is a relatively small constrained impact. And as you look further out, there's a little bit more uncertainty. And so we're kind of actively managing that.
But then you have the flip side of that, which is there's certainly been some increased consumption for things you would have seen on the news, cleaning supplies, canned food, et cetera. And that is stuffing with supply chains of the partners to provide that to us. And so we are in incredibly frequent contact with all of the key players to make sure that we are staying in stock for our members on, what you say is still a narrow set of goods where you're seeing more frequent shopping.
I think as it relates to what that means to our business and -- for over a longer period of time, it's really hard to say. It's clear that some consumers are nervous about how the situation with coronavirus will evolve. And so we're seeing what clearly is some stock-up behavior on goods that would be associated with a broader change in kind of an everyday life in the country. But it's still, we think, a smaller portion of members on a narrow set of goods, and so we're not sure how that will evolve. And you could imagine in a few different scenarios, either broader kind of nervous buying or longer term but real change and things tied to school and work closures, et cetera. And so we're just managing supply chain in our business under a world of broader range of scenarios that we normally would do in making sure we're well prepared to pivot however the world evolves.
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