The coronavirus pandemic has claimed innumerable lives, rattled the stock market and brought the economy to standstill. The retail sector, in particular, has been dealt a massive blow. Supply-chain bottlenecks and reduced traffic has either led to store closures or limited operating hours, which in turn is hurting sales and productivity. Amid the prevailing uncertainty, many retailers have called-off their guidance and drawn cash from revolving facility to maintain liquidity. In order to stay afloat in these troubled times, Casey’s General Stores, Inc. CASY has also prioritized its actions.
Witnessing lower footfall and fall in demand, this operator of convenience stores has decided to withdraw its fiscal 2020 guidance. However, management clarified that the company is well positioned to sail through these troubled waters, citing strong balance sheet and ample liquidity. We note that even after drawing $100 million on its revolving credit facility, Casey’s still has $150 million in capacity under its facilities.
Moreover, management is undertaking some bold steps to optimize cash flow. These involves deferring capital expenditures, revisiting payment terms with suppliers, lowering inventory levels and adjusting store operating hours. The company also plans to lower production of prepared foods in order to contain in-store stale costs.
As people are working from home, dining at home and maintaining social distancing, they are resorting to various apps and e-commerce platforms to fulfill their requisites. Casey’s fully understands the need of the hour and is strengthening pizza promotions for guests who are seeking meal solutions. It is also enhancing delivery capabilities via DoorDash at 579 stores. It is increasing online grocery items at all outlets. Notably, the company also owns and operates distribution centers and transportation fleet.
Undoubtedly, Casey’s is committed and sensitive toward employees as much as it is toward customers during the time of this pandemic. Some of the prominent initiatives undertaken by the company include increasing of pay by an additional $2 per hour of all full-time and part-time store and distribution center team members; additional operational bonuses to key field support team members; additional paid leave for impacted team members; health checks and others.
Shares of this Zacks Rank #3 (Hold) company have plunged 23% compared with the industry’s decline of 24% in the past three months.
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