ANKENY, Iowa — Along with an update on its cleaning and hygiene practices, social distancing measures and changes in foodservice, Casey’s General Stores Inc. has provided details on the effect of the coronavirus pandemic on the convenience-store retailer’s operations and has withdrawn its financial guidance for fiscal 2020.
“The novel COVID-19 public health crisis presents significant challenges around the globe, and our hearts go out to all of the individuals and families impacted,” said Darren Rebelez, president and CEO of Casey’s. “We are tremendously grateful for the selfless efforts of everyday heroes, including front-line workers and medical professionals addressing urgent needs across our country. Our primary focus is on the health and well-being of our valued team members and guests, while maintaining business continuity across our nearly 2,200 stores that remain open and continue to serve our communities as critical businesses.”
- Casey’s is No. 4 on the Top 40 update to CSP's 2019 Top 202 ranking of U.S. c-store chains by number of retail outlets. CSP will release the complete 2020 list in June.
To help take care of those employees, Casey’s has increased all full-time and part-time store and distribution center team members’ pay by an additional $2 per hour. It has also provided additional operational bonuses to key field support team members, additional paid leave for affected team members and additional paid flex time for full-time and part-time team members.
“Casey’s started the fourth fiscal quarter with strong momentum, with many of our strategic initiatives maturing and accelerating business performance,” said Rebelez. “However, the impact of the COVID-19 pandemic has caused a decline in store traffic and consumer demand across our business, and we believe it is prudent to withdraw our financial guidance for fiscal 2020. Casey’s maintains a strong balance sheet and ample liquidity to weather the near-term impacts and expects to emerge from the crisis in a position of strength.”
The Ankeny, Iowa-based company owns nearly all of its assets, eliminating any lease exposure, and its liquidity position is strong, he said. After drawing down $100 million on its revolving credit facility to maintain maximum flexibility, the company still has $150 million available under those facilities.
Casey’s is taking a number of immediate steps to optimize cash flow. It is deferring capital spending, which includes a pause on new-store construction and replacement stores.
The company also said it is reducing inventory levels throughout the stores and supply chain, adjusting hours of operation at almost all stores and limiting 24-hour operation. It is strengthening pizza promotions and reducing prepared food production to reduce in-store costs of stale items. And it is expanding delivery and making 50 additional grocery items available via DoorDash at 579 stores, up from approximately 400 stores, as well as expanding the grocery selection in stores.
Casey’s, which operates in 16 states, owns and operates its own distribution centers and transportation fleet to service its stores, which it said gives it flexibility to navigate through the near-term challenge of the COVID-19 situation. Management is leveraging this flexibility and working with suppliers to manage inventory levels and mitigate any potential risks, the company said. It is also reviewing terms of payment to suppliers. To date, the company has not experienced any significant supply-chain disruptions, it said.
“It was only on March 10 when management spoke to mid-single-digit percentage underlying [comparable same-store sales] across all business segments with accelerating trends,” said Christopher Mandeville, equity analyst at Jefferies Financial Group Inc., New York, in a research note. “How quickly things change as Casey’s has pulled its fiscal 2020 guidance with only four weeks left. While there was no quantification of what impact was realized in the second half of March, the act of removing guidance to us implies a material drop-off in comps.”