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Consumer & Retail Faces Widespread Risk from Coronavirus

AlphaSense Staff

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Q1 saw decreased comparable store sales in China as the Coronavirus response prompted store closures and decreased customer traffic to minimize spread. Factory and port closures are likely to have a bigger impact on Q2 orders given strong Q1 inventory levels at the time Coronavirus infections were identified in late January. 

As the virus spreads globally, the entire Consumer & Retail sector remains cautious and uncertain about 2020. Who believes they have increased risk due to their supply chain dependencies? How significant has the impact been for retailers with significant footprints in infected regions like China and Italy?

Takeaways:

  • Comparable store sales in China decreased by up to 80% in the month of February for some retailers due to temporary store closures, reduced hours, and decreased customer traffic 
  • Companies that completed aggressive supply chain risk management efforts in 2019 related to the trade war are experiencing limited supply chain risk 
  • China factories, ports, and freight operators are beginning to operate back at near-normal levels as of early March 

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Here are the highlights. [Note: We are updating this post and our compilation post to reflect the most recent commentary. Last updated 3/20]

 

Ross Stores Inc (8K - 3/20)

“We want to emphasize that in these unprecedented times, the safety and well-being of our customers and associates will always be of the utmost importance to us. As previously announced, we have already closed numerous stores based on government directives and reduced store hours across the country. Today, we decided to close all locations to help prevent the ongoing spread of the coronavirus.”

 

Tiffany & Co (8K - 3/20)

Mr. Bogliolo also said, “Our primary focus now is on preparing our Company, business and communities for the COVID-19 pandemic and the return to normal operations. The health and well-being of our employees and customers are critical and we continue to adopt recommended safeguards and plans at our stores, offices and factories as circumstances change. We have had to temporarily close or shorten operating hours of certain stores around the globe. For example, in the Chinese Mainland, since January 24, 2020, we have lost approximately half of our total normal retail trading days as a result of closures or shortened hours of operations. Our agile teams are aligned to continually assess the dynamic conditions resulting from the global outbreak to determine our near-term actions.”

 

TJX Companies Inc (8K - 3/19)

Effective today the Company is closing all of its stores in the United States, Canada, Europe, and Australia for two weeks. In certain regions, including Germany, Poland, Austria, Ireland, and the Netherlands, and a number of U.S. and Canadian locations, the Company had previously closed stores based on several factors, including government or health department requirements. The Company is also closing its online businesses tjmaxx.com, marshalls.com, and sierra.com. Further, the Company is temporarily closing its distribution centers and offices, with Associates working remotely when they can. We know our Associates are very concerned for their health and financial well-being, and we plan to pay our store, distribution center and office Associates for two weeks during these closures.

To further strengthen its financial position and balance sheet, and maintain financial liquidity and flexibility, the Company is taking the following actions:

  • Drawing down $1 billion from its revolving credit facilities.
  • Suspending its share repurchase program.
  • Evaluating its dividend program.
  • Reviewing all operating expenses.
  • Reducing capital expenditures.

The Company also announced today that it is withdrawing its first quarter and full year Fiscal 2021 financial guidance given on its February 26, 2020 earnings conference call. The Company is not providing an updated outlook at this time.

 

L Brands (8k - 3/19)

With the wellbeing of its customers, associates and communities as its top priority, and to help limit the spread of the Coronavirus, the Company will temporarily close all Bath & Body Works, Victoria’s Secret and PINK stores in the United States and Canada, effective March 17 through March 29, 2020. Additionally, home office associates have been asked to work from home if possible. All employees will continue to receive pay and benefits during the temporary closure period. These decisions will be re-evaluated as new information becomes available regarding the COVID-19 pandemic.

Subsequent to the issuance of the press release, the Company made the decision to suspend all new e-commerce orders for Victoria's Secret and PINK through March 29, 2020. The Bath & Body Works e-commerce business will continue to operate with prioritization on soaps and hand sanitizers. This business is fulfilled by a third-party whose ability to continue to perform these services may be affected by developing circumstances.

First Quarter 2020 Earnings Guidance Update

Due to the heightened uncertainty relating to the potential impacts of COVID-19 on the Company’s business operations, including its duration and its impact on overall demand for merchandise, the Company is withdrawing the first quarter 2020 earnings guidance issued on February 26, 2020. The Company is not providing an updated outlook at this time.

Estee Lauder Companies Inc (8K - 3/18)

Our guidance on February 6, 2020 for the fiscal 2020 second half and full year ending June 30, 2020 reflected the best information available to us at the time, as well as our best estimates about the pace of recovery of our then-impacted businesses. However, most retail stores in North America and Europe are now closing, and our global business is more broadly impacted by COVID-19 than we initially expected. As a result, we are withdrawing our previous guidance that we no longer expect to meet.  We expect to provide an update regarding the impacts of COVID-19 on our business and our recovery plans when we report our next earnings scheduled for May 1, 2020.

 

Nordstrom (8k - 3/17)

The Company issued its fiscal 2020 guidance on March 3, 2020, which did not include the impact of COVID-19. Due to heightened uncertainty relating to the impacts of COVID-19 on the Company’s business operations, including the duration and impact on overall customer demand, the Company is withdrawing its 2020 guidance.

  • While February sales were in-line with expectations, the Company experienced a broad-based deceleration in customer demand over the past couple of weeks, particularly in markets most affected by the virus.
  • With more than 100 years managing through multiple business cycles, Nordstrom remains flexible and agile in making appropriate adjustments to its operational and capital allocation plans. The Company continues to maintain a strong focus on inventory discipline and expense management and remains committed to executing its savings plan of $200 to $250 million in fiscal 2020.
  • In light of the current economic uncertainty, Nordstrom is making further reductions to its expense and capital expenditure plans and is currently suspending share repurchases.

lululemon (PR - 3/16)

VANCOUVER, British Columbia--(BUSINESS WIRE)-- lululemon today provided an update on its global store operations in response to the continued spread of COVID-19.

In light of the rapidly changing developments, lululemon announced the closure of all stores in North America and Europe, from March 16 through March 27. Guests can continue to shop on lululemon.com.

 

Brown-Forman (PR - 3/16)

LOUISVILLE, Ky.--(BUSINESS WIRE)-- To help prevent the spread of COVID-19 (coronavirus), Brown-Forman (NYSE: BFA) (NYSE: BFB)  is temporarily suspending tours, tastings, and retail shops at all of its cooperage, distillery, and winery locations. Our goal is to minimize the risk to employees and guests and help lower the probability of the spread of the virus to our employees, their families and the communities where we operate.

 

Shaw Communications (PR - 3/16)

CALGARY, Alberta, March 15, 2020 (GLOBE NEWSWIRE) -- Shaw Communications today announced it is temporarily closing its 116 corporate Freedom Mobile and Shaw’s 43 retail stores through March 27, as a response to the threat of the COVID-19 virus.

The announcement affects corporate Freedom Mobile and Shaw retail stores across Canada.

 

VF Corp (8K - 3/16)

DENVER--(BUSINESS WIRE)-- In response to the global COVID-19 coronavirus outbreak, VF Corporation (NYSE: VFC) today announced the temporary closure of all owned retail stores across North America, effective March 16 through April 5. All retail employees at these locations will continue to receive full pay and benefits during the temporary closure period.

In addition to its retail fleet, VF has closed its corporate and brand offices in North America until April 5 and is enabling all office employees to work remotely. The temporary closure of both offices and retail locations may be extended depending on the overall state of the COVID-19 situation.

 

ULTA (Earnings Call - 3/12)

Question – Irwin Bernard Boruchow: So I guess my question, going back to the corona impact on the business. Maybe just at a higher level for Mary or Scott. Can you maybe talk about what percent of your makeup transactions do you believe carry some kind of in-store trial components and maybe combined with the service component of what you guys offer? And I guess where I'm going with that is I'm just trying to understand important customer trial and in-store behavior is to the sales model.

Answer – Mary N. Dillon: Yes. I mean it's a good question. I would say, certainly, services in total are much, much -- it's a very small part of our business compared to what we saw at retail, right? So in general -- and most of that is hair services. So the thing is that -- and that part of the business, we're going to continue as planned.

Certainly, the notion of being able to try things is an important asset of how we serve up beauty, but it doesn't happen in every transaction. It really just doesn't. And also, we have the ability for our associates to still help our guests in multiple ways, right? So they can take a tester, sanitize it, put out somebody's hand to show them a color. We can use our GLAM STREET -- our GLAM LAB app, which is really very realistic. And so it's early stages, but we don't really think that's something that is going to prevent people from making great transactions and decisions. We're going to do everything we can. We've got a skin match tool also on our apps. So we've got tools that we think will allow that kind of consumer behavior. But we'll -- as we look at this, we'll learn more and quantify more. But if -- I mean there's no question it's the right decision to make right now in the short term, and your question is a good one about -- and this may not last for that long. We'll just have to see. But we'll do our level best to make the shopping experience online and in-store for our guests just as immersive as we can, if that makes sense. But we feel like it's fine, it's going to be the right thing to do, and guests would expect it

 

CVS (Barclays Global Healthcare Conference - 3/12)

Question – Steven James Valiquette: So let's start with comments around coronavirus. So obviously, this is very topical for investors right now. So let's talk about how this might impact the various parts of your business the way you see it right now, and if it's possible, to segment it into Retail and Long-term Care Pharmacy versus PBM versus managed care. But let's start with coronavirus.

Answer – Eva C. Boratto: Yes. Thanks, Steve. This is Eva, and a pleasure virtually meeting with everyone here. I would say overall the financial impact is difficult to quantify at this point. Things are fluid, and we're continuing to monitor the status of the situation and the cases that are identified. I think, first and foremost, the health and safety of our customers, our members and our colleagues is a key priority for us, and we're taking all of the necessary steps to ensure business continuity and their well-being.

So just to give you some color, each of our business leaders are working to ensure business continuity plans are in order to meet the needs of our customers. In terms of that, as we think about pharmacy supply, we've experienced no disruption at this point. We're in close contact with all of our suppliers. And what they've shared with us is they tend to carry, on average, 3 to 6 months of inventory. And I would say, given our size and scale and the power of Red Oak and the diversity of our suppliers, we think we're in very good shape at this point.

We also are able to have, I'll say, additional information around API sourcing and what have you to enable us to be proactive on that front. As you look at what we've done to ensure consistency of care, everyone probably saw our announcement of offering $0 copay telemedicine for visits for any medical reason, not just specific to COVID-19, with the goal of eliminating potential exposure in the physician offices or with others. We have waived our out-of-pocket costs for all diagnostic testing related to COVID-19 for all of our Aetna plan members.

And finally, as you look at the front store of our business. Clearly, we've seen an increase in utilization in certain categories, particularly around cleaning supplies, masks, sanitizers, those types of categories. And overall from a supply perspective, our front store supply remains strong. We have had challenges. I'd say we're essentially out of stock on masks. And you could see on sanitizers, sporadically, we're out of stock. But we're continuing to receive supply.

Dollar General (Earnings Call - 3/12)

Before I turn the call over to John, I want to note that we are following the coronavirus outbreak closely, and our thoughts are with everyone affected. As compared to some retailers, our direct import sourcing exposure is relatively limited, although many of our domestic vendors also source from other countries. We have limited insight into the extent to which our business may be impacted by this outbreak, and there are many unknowns. But we currently do not have material impact on fiscal 2020 results from anything that we have experienced to date. Of course, we are continuing to monitor the events closely.

We are also mindful of those who were impacted by the devastating tornados [destructed] Nashville and surrounding areas last week, and we are actively working to support our people and this community. As I've (inaudible) and their health and safety will always be a top priority.

 

Target (10K - 3/11)

Political or financial instability, currency fluctuations, the outbreak of pandemics or other illnesses (such as the recent coronavirus), labor unrest, transport capacity and costs, port security, weather conditions, natural disasters or other events that could slow or disrupt port activities and affect foreign trade are beyond our control and could materially disrupt our supply of merchandise, increase our costs, and/or adversely affect our results of operations. There have been periodic labor disputes impacting the U.S. ports that have caused us to make alternative arrangements to continue the flow of inventory, and if these types of disputes recur, worsen, or occur in other countries through which we source products, it may have a material impact on our costs or inventory supply. Changes in the costs of procuring commodities used in our merchandise or the costs related to our supply chain, could adversely affect our results of operations.

 

Starbucks (Prospectus - 3/11)

Due to the outbreak of the coronavirus disease (COVID-19), we temporarily closed stores in China beginning in late January and reduced operating hours at stores that remained open. More than half of Starbucks stores in China were temporarily closed as of January 28, 2020. These unplanned store closures, combined with planned closures in observance of the Chinese New Year holiday, resulted in peak closures of approximately 80% of Starbucks stores in China in early February. Since that time, we have gradually reopened the vast majority of these stores in a disciplined and thoughtful manner.

 

Adidas (Earnings Call - 3/11)

And here is an assessment of the coronavirus development. What we know is, at the beginning of 2020, Greater China performed strongly. So for the first 3 weeks, we saw a stronger performance of our China business than we've seen before. Between Chinese New Year and end of February, our revenues were approximately down 80% year-over-year. In March, we're seeing a slight improvement. That means stores and warehouse are gradually opening up, and the traffic is picking up but from a very low base. And of course, we're working together with our wholesale partners to keep inventory levels healthy, which means it could result and will result in significant takebacks. We want to make certain that we have fresh inventory in the channel. And particularly, when we move from one season to another, this is fundamental for the future success.

Q1 revenues in China, we estimate to be approximately between EUR 800 million and EUR 1 billion below prior year, which already includes a significant amount of potential takebacks. The operating profit in Greater China is expected to be between EUR 400 million and EUR 500 million below prior year. Global sourcing activities have not seen a major impact. What we don't know is how -- and this is where the situation keeps evolving with many unknowns. What is the further recovery rate and acceleration in China? What is the extended spillover into other countries? So far, we've seen business impact in Japan and South Korea only. And should there be, which we have not seen, availability issues of raw materials. And that's why in the context of this, we can only give you the guidance we have given, and we cannot be more specific than we are at this stage. Everything else, we'll be getting.

 

DFS Furniture (Earnings Call - 3/10)

Finally, we'll come on to our outlook, which is now made more uncertain given the potential impact of COVID-19 on the remainder of our financial year. I'll spend more time on this later, but the headlines of our approach are based on: number one, our people and our customers; number two, managing our operations and our supply chain; and number three, the potential impact on consumer behavior and on our markets.

We are following all of the latest guidance from the government and the relevant health authorities in terms of being transparent and supportive with our people.

After a period of a few weeks disruption for our Chinese suppliers, the situation is now normalizing, and we have detailed business continuity plans in place and prepared for all aspects across the group.

Finally, when it comes to the impact of COVID-19 on consumer demand in the U.K., all I can say here is that, clearly, it's incredibly difficult to predict what may happen over the remaining 16 weeks of our financial year. We haven't seen a material impact yet on order intake, and we have a very strong business model in terms of cash generation, balance sheet and scale to manage any potential disruption.

 

Dick’s Sporting Goods (8K - 3/10)

The Company's outlook balances the enthusiasm it has for its business with the rapidly evolving coronavirus situation. Accordingly, the low-end of the Company's outlook includes some caution related to supply chain disruption potentially impacting its results beginning in the second quarter.

 

At Home Group (8K - 3/10)

Mr. Bird continued, “We are also closely monitoring the impact of the Coronavirus outbreak on our supply chain and consumer demand while prioritizing the health of our team members and customers. Given the fluid nature of the situation, we look forward to sharing an update on current trends during our upcoming earnings call on March 24, 2020.”

 

Macy’s (Bank of America Merrill Lynch Consumer & Retail Technology Conference - 3/10)

Answer – Lorraine Corrine Maikis Hutchinson: Thanks so much, Paula. I wanted to kick things off with a broader macro question. How do you think your core consumer is today?

Answer – Paula A. Price: Well, what I would say, Lorraine, is very similar to what we've said before, with the obvious caveat being that our outlook was prior to the COVID-19 outbreak and the oil plunge. So here's how we think about the consumer fundamentals.

U.S. job, wage and income growth remain solid, which should contribute to consumer spending. But while the consumer environment remains healthy, we do expect slower economic growth overall versus prior years. And so with that in mind, we would expect that we would maintain our relative market share as a starting point for how we think about 2020.

Answer – Lorraine Corrine Maikis Hutchinson: Excellent. The potential impact to supply chains and sales from the coronavirus is top of mind for investors right now. In terms of sales, are you seeing any impact from the softer tourism? And how exposed are you to this revenue stream?

Answer – Paula A. Price: Yes. So I would start by, again, just saying, as I said in my opening comments, that this continues to be very much an evolving process, and we're getting updates from our teams on a daily basis. And again, first and foremost, our colleagues and customers are top of mind, and we're taking every precaution there. And so as this continues to evolve and more cases are being identified throughout the U.S., it's still too soon to quantify what the impact on sales could be. But what we can say is that we're certainly seeing a slowdown in international tourist sales. And as for the impact from the domestic customer, we'll continue to monitor that very closely.

 

Christopher & Banks (Earnings Call - 3/10)

Before I turn to our outlook, I wanted to echo Keri's comments that our thoughts are with those that have been impacted by the coronavirus. In regards to the COVID-19 coronavirus, the situation remains highly fluid, and we are monitoring it closely to assess the potential implications to our business. Accordingly, our guidance does not reflect the potential impact of the COVID-19 outbreak.

With that said, for fiscal 2020, we expect comparable sales to be up low single digits in fiscal 2020, gross margin expansion of 200 to 350 basis points, resulting in adjusted EBITDA of flat to positive $5 million. And we expect to end the fiscal year with positive cash and no outstanding borrowings under our asset-based credit facility. We expect capital expenditures for 2020 to be approximately $3 million, which is in line with our 2-year average spend.

 

EssilorLuxottica (Earnings Call - 3/6)

Answer – Laurent Vacherot: Paul, maybe on the coronavirus effect? Do we see something in other geography than China?

Answer – Paul du Saillant: So I will -- Laurent, will comment for Essilor. And maybe, Stefano, if you want to give some color on the Luxottica side for the coronavirus impact. On the Essilor side, at this point, meaning early March, the main business impact have been localized in China, where clearly the traffic in the store, in the shopping malls were way down in February. Outside of China, so far, we have seen a little bit of impact in Asian, namely Singapore, some little impact in Korea, South Korea. And so far, in Europe, we don't see any impact. So we'll have to monitor, and we monitor daily, weekly the dynamic of the market. But so far, on the business impact, it's mainly in China. And we'll see in March if the traffic in the store will build progressively. And as Laurent said, on the call for the first quarter, we will have a good view on where we are. But that's where we are on the 6th of March.

Answer – Laurent Vacherot: Then on the impact in other geographies?

Answer – Stefano Grassi: Yes. Yes. I'll probably add a little bit more color on the B2C side of the business. We do continue to see traffic deceleration on a double-digit territory clearly, in the Asian part, Mainland China, Hong Kong, and some of our Retail footprint, as Paul explained, is actually trending on the double-digit negative. Where do we see slowdown? We do see slowdown in some of our Retail operations in Europe, the one that are at least more affected by the coronavirus, whether because there is a lack of touristic traffic in certain parts of Europe or because there are specific restriction to mall and, therefore, that is impacting our Retail store footprint performance.

But just to put in perspective our guidance, as Laurent explained before, the way we portrayed this guidance is to have a low start of the year, first quarter and the first part of 2020 and then progressively improve our performance month-after-month, quarter-after-quarter. That is what behind our performance assumption that we have from a top line perspective.

Tata Motors (6K - 3/6)

Jaguar Land Rover sales in China grew on average about 25% year on year for the 6 months from July through December 2019 and we continued to see strong growth for the first 3 weeks of January. The coronavirus has significantly impacted China sales with February retails down around 85% vs the prior year.  In the first half of the month about 20% of dealers were open which has since improved to now over 80% although most are still operating with reduced staffing and facilities.  Jaguar Land Rover expects this to improve over the course of March, however, retail sales are expected to recover more gradually.  The spread of the virus to other markets such as South Korea, Japan, and Italy will also impact sales in those markets.

Starbucks (8K- 3/5)

During the month of February, Starbucks China’s comparable store sales were down 78% versus the prior year, primarily due to temporary store closures, reduced operating hours and severely reduced customer traffic. The sharpest decline in weekly comparable store sales occurred in the second week of February; however, as disclosed on February 27th, we are seeing early signs of a recovery with sequential improvements in weekly sales. In the last fiscal week of February, relative to the prior week, average daily transactions per store improved 6% and total weekly gross sales in China grew 80%, reflecting the reopening of stores. In that last week, Starbucks China’s mobile orders accounted for approximately 80% of sales mix, with 30% Mobile Order & Delivery and 50% Mobile Order & Pay.

Walmart (Consumer Global and Retail Conference - 3/5)

Answer – M. Brett Biggs: Yes. It's -- I think like a lot of other companies, I mean, we're just -- we're watching this really closely. We're -- it wouldn't surprise you, the first thing we're concerned about is safety of associates and customers and making sure we're doing the right thing. In China, our stores, for the most part, have stayed open, which -- the communities there need that, but it's been challenging in China, and we talked about that a couple of weeks ago. The U.S. are starting to see more news, which I think everybody anticipated, and we're just going to be really careful about it.

From a supply chain standpoint, we haven't seen major impacts. So not much different than I would have said a couple of weeks ago. I do think in ways, the work that our merchants did around tariffs over the last 12 to 18 months helped us think about some things differently that are probably paying off some now and how you think about supply chain differently. It does feel like -- I'm reading the same things you are, but it does feel like China is starting to kind of come back to work, which will help from a factory standpoint. And we'll just have to keep monitoring it day-to-day, week-to-week. We're seeing, as you would expect, stock-up with customers on certain items, but not tremendous changes in customer behavior. Again just week-to-week, we'll have to see how it transforms and we'll have to keep people safe and continue to run the business efficiently as we can.

Hugo Boss (Earnings Call - 3/5)

So what are we seeing? First of all, we look back at a very promising and successful start to 2020 with 3 consecutive weeks of strong double-digit growth in Asia Pacific, reflecting a highly successful Chinese New Year. However, since the coronavirus began to spread in late January, approximately 60% of our more or less 150 retail points of sales in Greater China were closed throughout much of February. Those that remained opened were not only operating at reduced hours, but more importantly, have recorded significant traffic declines of more than 80%.

GEOX (Earnings Call - 3/5)

So the like-for-like performance suffered in February minus 85%, and as of week 09, the aggregate year-to-date like-for-like sales for the region were negatively reaching almost minus 50%. Retail sales performance in Italy and in Europe. On 21st of February, Coronavirus and urgency also hit North of Italy, mainly the region of lombardy and then Veneto and in Romania. And on the 24th of February, (inaudible) is introduced measures including the closure of 35 direct operated stores in Lombardi last week and out of a total of 47. Consequently, last week, I'm just talking about the last week. Like-for-like sales in Italy were negative with the lowest figure being recording obviously margin due to the closures. And also the other region in Italy, has nonetheless been affected by the drop in footfall and the general level of, I would say, concern among our consumers which is, in turn, reducing their propensity to make purchases. Overall, in week 9, Italy recorded a negative like-for-like sales at minus 44% causing aggregated like-for-like year-to-date for Italy to also become slightly negative. A similar dynamics have been recorded in the rest of Europe.

Lowe’s (UBS Global Consumer Consumer and Retail Conference - 3/5)

Well, look, what I would say is, I mean, this is a unique market environment, with the coronavirus. I mean like all other businesses and retailers, I mean, we're staying really close to our supply base around the world, our manufacturing base, because we are predominantly a business that really penetrates heavy in spring from a sales perspective.

As we look at Q1, we see no short-term interruptions in the business. As a matter of fact, our business trends are strong. As we look farther into the year, into Q2 and beyond, it becomes more uncertain because you're at the mercy of the new cycle. You're at the mercy of what happens next.

Kroger Co (Earnings Call - 3/5)

From a financial standpoint, it is too early to tell the effect on our business. It is not included in our guidance. And while it is obviously very early for this public health event in the United States, we're not seeing anything so far that would cause us to change our guidance.

We generally believe that we have limited supply chain exposure in China as the majority of the products we source is domestic. We certainly feel for those in America and around the world who have been affected. The health and well-being of our associates, our customers and our communities is Kroger's top priority. Always being there for our communities is part of our heritage and especially in times of uncertainty. We believe everyone deserves to have access to affordable fresh food.

Burlington Stores Inc (Earnings Call - 3/5)

The situation is evolving very rapidly and there are a lot of unknowns. Our guidance for the first quarter does not, and cannot, incorporate a full set of risks that we, along with other retailers may be exposed to in the coming weeks. That said, we are taking steps to prepare as best we can for a range of possible outcomes.

Home Depot (Raymond James Conference - 3/4)

So on our global supply chain, I would say, for Q1, we're in pretty good shape. So product for Q1 is largely in our stores. So Q1 and 2, for us, is a big strength. Spring and outdoor project business, we're largely set. So all our merchandising space has largely transitioned to spring product. We'll be finished with that in our northernmost markets in the next week or 2. But -- so all that product that comes in, think grills and patio sets and the outdoor power equipment I was talking about previously, for Q1, that product is largely in-store, in our supply chains or on the water.

Q2, I would say, it's a very fluid situation. So as you say, we have very strong relationships with our supplier partners. For our direct imports, where we're working directly with factories in Asia, we are in constant contact with them and monitoring their capacity and how they're getting back up to speed and what their shipping horizons, timing is going into Q2. It's fluid. We're literally looking at this PO to PO. The good news is the ports are open and functioning. We haven't had delays in ports. It's really a matter of workers getting back to factories from the Chinese New Year. Most of those workers or many of those workers are in residence at the factories. And for those 2 weeks of Chinese New Year's, they travel home to wherever their provinces may be out of the major cities. So it's been a transportation issue in restrictions of travel intra-country to get those workers back to the factories.

So again, we're in contact, varying degrees, as you can imagine, of building back to capacity. The next set of suppliers are suppliers that, while we don't procure directly from China, we know the country of origin is China and Asia. And we're in constant contact with them, starting to build orders into Q2. Again, it's PO to PO. You're obviously not going to order too deep into Q2. You just -- the supply chain won't handle that sort of cube. So we just have to keep working it. Nothing alarming at this point. We said there was nothing in our guidance for 2020 that included coronavirus. We were 3.5% to 4% at our analyst meeting in December and after our first quarter -- after our Q4 earnings call. And there's no change to that at this point. But certainly, it's a fluid situation.

Dollar Tree (Earnings Call - 3/4)

Let me give you a bit of an update on the coronavirus as it affects our supply chain as we see it today. Our global sourcing group and merchants along with our logistics team are meeting daily and updating our progress on visibility to individual purchase orders. Generally, we are seeing production pickup, and factory attendance is increasing each week. Our global sourcing team in China and third parties that provide quality assurance inspections are nearly at normal levels. All ports and third-party freight consolidators are open and operating at near-normal levels, and we are getting all needed space on vessels for our freight. At this point, all of our Easter merchandise and lawn and garden seasonal product is in our domestic supply chain, either in distribution centers or flowing to stores. At this point, we see a very small percentage of product canceled and some products moving on to later delivery, usually by a few weeks. And our teams are working to mitigate with sources elsewhere, including domestic sources, to mitigate any effect there. More to come.

Our initial outlook for fiscal 2020 includes the following assumptions: our outlook does not include any potential impact related to the supply chain or other aspects of the company's business for the COVID-19 coronavirus. 

We certainly are seeing a spike on anything that's related to hand sanitizers and cleaning surfaces. But I would say we're also in first [of] month right now in tax refund time. So right now there is money in the market for all those reasons, plus a heightened efforts for everyone to wash their hands and use hand sanitizer. So we're seeing that in the stores as well.

Walmart (Raymond James Conference - 3/4)

Certainly, I'm looking at reading the same things as you are and with Coronavirus and certainly, we're concerned about associates and and customers and making sure we're doing the right thing there. When you look at kind of the underlying economy, it still feels good to us. And we said that a couple of weeks ago at our analyst meeting, inflation is low, interest rates are very low, wages are good. Fuel prices are low. So all of that portends to being -- having a pretty good economy, particularly here in the U.S. And so I think, overall, the consumer feels pretty good.

Brown-Forman (Earnings Call - 3/4)

Specifically, our base in China has been growing underlying net sales at a double-digit rate since fiscal 2018, led in large part by our growing e-premise business where we have been focusing our investment in this market. Our performance through January had essentially not been affected by the coronavirus. So understandably, we do expect a marked slowdown in our fourth quarter in this market in other parts of Asia and have already experienced this in February. Despite this near-term headwind, we remain optimistic about the long-term growth potential for our portfolio throughout Asia.

So again, if you looked at what we did, we took our overall forecast down, as you saw, we reduced our underlying forecast with 2 factors. First, it was the tempering of the growth and contribution from some of our international markets, again reflecting some short-term disruptions as well these macro and economic and geopolitical challenges. So when we look at our base business, but we would estimate now that our base business is doing is probably growing in the 3.5% to 4.5% range. It is, therefore, a couple of points less than what our expectations were just 3 months ago. But the second factor that we built into our forecast, and this is what you're asking specifically about Vivian, that led to a reduction in our top line outlook, and again not surprising, is this unpredictability and uncertainty surrounding the coronavirus and what it may have on our business globally. So we've estimated at this point, there's about a point drag including those markets that are currently affected. So to your point, directly from the Asian markets, including China and other parts of Asia, Travel Retail and we haven't Italy in there. So collectively, that's about 8% of our business. And as I said earlier, yes, we've already seen areas -- many of these areas already affected in results. But that being said, we also have, in that 1%, some additional downside impact. And we don't know, none of us knows that's going to be enough, too much we're learning daily as this situation and So we're really only looking at our fourth quarter. We haven't had to estimating downstream, secondary effects on anything beyond the demand we see in an expectation for perhaps it some other markets. We don't know about the economy and the consumer confidence and sentiment and how they may linger into our first quarter and summer months. 

Target (Earnings Call - 3/3)

But first, I want to address the question of whether we've accounted for any known or anticipated impact related to the coronavirus. And the answer is that as of today, we haven't seen a large impact on our business or outlook. Of course, we are monitoring our import programs down to the purchase order, and we've already made some slight adjustments to our plans to ensure we are well positioned throughout the year. But because of our size and the flexibility that comes from our multi-category portfolio, we haven't seen anything so far that would cause our financial expectations for 2020 to deviate from our longer-term algorithm.

And certainly, from a merchandising standpoint, we know that we're going to see some periodic delays. We're out in front of that, making changes in our assortment and our promotional and presentation plans. But all that's reflected right now in our view of guidance for certainly the first quarter and the balance of the year. We've also been working very closely with some of our domestic vendors, our DSD partners, as we see some growing demand in categories like household essentials and food and beverage to make sure we are supporting that with the right level of inventory.

But over the last few days as obviously everyone's been reporting, we've certainly seen a U.S. consumer that's starting to stock up on household essentials, disinfectants, food and beverage items. All those staple items that the CDC has recommended, they add to their pantry. And certainly, we've seen aggressive shopping across the country in our stores. So we're obviously working closely with our domestic vendors, with our DSD partners to make sure that we're elevating inventory in preparation for what we think is going to be a continued demand for stock-up items.

So certainly, we're seeing that across our network. We expect that to continue over the next few weeks, and we'll watch it carefully over time.

Ross Stores (Earnings Call - 3/3)

As noted in our press release, our guidance does not reflect the potential unknown impact from the evolving coronavirus outbreak. While we're closely monitoring the situation, there remains a high level of uncertainty over supply chain disruptions in China. In addition, it is unclear how a further possible spread of the coronavirus could negatively impact U.S. consumer demand.

Autozone (Earnings Call - 3/3)

At this point, I'd like to talk about any disruption we may be seeing from the ongoing coronavirus epidemic. While we have not incurred disruption thus far, we must and are being diligent. We have created a contingency plan for each merchandise category sourced from China. Our teams have done a wonderful job planning for potential scenarios. At this point, we have nothing substantial to report .But the longer this outbreak lasts, the more it will impact ourselves in both our and the overall retail industry. It is currently a very fluid situation as many of the factories have just begun to reopen after an extended Chinese Lunar New Year holiday. Some are coming back online quickly while others quite slowly, and certain of them haven't come back online yet. The next few weeks will be critical.

As you would expect, over the last month or so, we have been very focused on the supply chain aspects of coronavirus and, in the last week or 2, more and more focused on what's happening here in the United States and, ultimately, Mexico and Brazil. We see no indications at this point in time of any demand destruction as a result to coronavirus. But just like we said with the supply chain, it's an incredibly, incredibly fluid situation. I think the next couple of weeks to a month, are going to be critical to see what actually happens. We don't have good insights into that.

Stanley, Black and Decker (Raymond James Conference - 3/2)

Throughout the first quarter, we really have not seen much revenue being generated in the local Chinese business, as you might expect. And that probably will be the case through the remainder of the first quarter. But probably the bigger question you have in your mind is our supply chain. Our supply chain in China serves 40% of our capacity across the company.

As it relates to the virus and where we are on China as far as our manufacturing capabilities as of today. We shut down these 10 plants for the 2 weeks of the holiday season around Chinese New Year. The week after that, these plants began to open up and the production capabilities and utilization have got to about 50%, 60% on average across those plants sometime last week. We're continuing to make progress on that. And those numbers continue to improve as we sit here today. And we're continuing to focus on getting more employees back to work, that's one of the challenges we have right now, where all the employees have not returned to the plants. We have a process that we need to go through with every employee before they get into the plant around checking for fever and other symptoms that are visible and then, obviously, wearing masks within the plant to try to protect our employees as much as possible in that environment. We do believe it will take another 2 or 3 weeks probably to get to 100% utilization in these plants. And that obviously is assuming that the virus doesn't worsen in China, that it stabilizes and begins to -- to begin to go -- retract or go backwards.

If that happens to get worse, then obviously, those numbers could change. But right now, that's what our plans are, and we believe that's achievable based on where we are today. This will cause some pressure for us in March and April from a revenue perspective. So we see that revenue in the last 2 weeks of March will probably be pressured based on these capacity challenges we're having and also in the month of April. We do believe it's more of a timing-related matter at this stage. But obviously, that's very dependent on where the virus goes and how significant it is. If things stabilize, and we don't see a dramatic worsening, we think that's probably where we are. We have a timing issue we have to work through for the first half of the year and the full year as well. 

Pernod Ricard (Earnings Call - 2/13)

So in terms of outlook, again, I won't go back on H1, which shows and clearly demonstrates the resilience of our business, of our business model. For full year, fiscal year '20 in particular, given the uncertain environment, we do expect clear, continued execution of Transform & Accelerate. It's second year of our strategic plan. We're right in the middle of it with a strong focus on operational excellence and sustained investment, as I mentioned earlier on, behind our strategic priorities in terms of markets, brands and initiatives. So good, diversified growth is expected to continue, albeit clearly the third quarter, January to March, will be, that's for sure, severely impacted by COVID-19 in China and Travel Retail Asia.

Estée Lauder (10Q - 2/6)

Although it is difficult to anticipate the full impact of the coronavirus on our business, global travel retail, localities most affected by the virus outbreak and destination markets favored by tourists are expected to experience the greatest negative impact in the coming months followed by a gradual recovery later in the fiscal year. We are also cautious of foreign currency movements, including their impacts on tourism. Additionally, we continue to monitor the effects of the global macroeconomic environment; social and political issues; regulatory matters, including the imposition of tariffs; geopolitical tensions; global health issues and global security issues.

Yum Brands (8K - 2/5)

The Company has taken a number of measures to protect its employees, customers and business partners, including the temporary closure of more than 30% of its restaurants in China. For restaurants that remain open, same-store sales since the Chinese New Year holiday period were down 40-50% compared to the comparable Chinese New Year holiday period in 2019, due to shortened operating hours, reduced traffic and other factors related to the outbreak. At this time, the Company cannot forecast when the closed restaurants will re-open (and at what rate) and the traffic will be restored (and at what level), or the other factors relating to the outbreak that will continue to impact the Company’s operations. Furthermore, the Company may be required or otherwise decide to close additional stores, reduce operating hours, or take other steps, as the situation warrants.

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