Jollibee posts P1.8-B loss, blames lockdown

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A CLOSED Jollibee store in Manila’s Sta. Cruz area during the quarantine period. — VICTOR V. SAULON

By Denise A. Valdez, Reporter

JOLLIBEE FOODS Corp. (JFC) swung to a net loss in the first quarter as the coronavirus disease 2019 (COVID-19) pandemic led to temporary closure of its stores worldwide.

The fast food chain operator reported an attributable net loss of P1.79 billion in the January-to-March period, a turnaround from profits of P1.46 billion the same period last year.

System-wide retail sales improved 1.6% to P55.15 billion, but revenues slid 2.3% to P39.43 billion as a “high number” of its stores suspended operations to follow lockdown measures caused by the pandemic.

JFC noted the improvement in system-wide sales is due to the consolidation of The Coffee Bean & Tea Leaf (CBTL), a coffee shop operator it bought in 2019. Excluding this, JFC’s system-wide sales would have fallen 10%.

The company said its system-wide sales were performing well in January, reaching a growth of 24.9% including CBTL. But a slowdown started in February when growth eased to 15.7%, then it turned around to a 32.5% decline in March when lockdown rules were put in place in China, the Philippines, United States and other countries.

“JFC’s financial performance in 2020 will not be a good one. It will incur even higher losses in the second quarter when the full impact of the lockdowns on the business will be felt,” JFC Chief Financial Officer Ysmael V. Baysa said in a statement.

He noted while recovery may begin in the second half of the year, JFC expects it to be slow, thus it holds on to its balance sheet to survive.

“[W]e have to rationalize and re-design our business structure to adapt to the new economic conditions and changed consumer behavior… We are setting up a provision of P7 billion for this purpose in the second quarter of 2020,” Mr. Baysa said.

The company announced on May 22 a plan to rationalize the number of restaurants per area and of the resources deployed in each store, to invest in digital technology, to increase capacity for delivery services, to establish delivery outlets with no dine-in facility, and to rationalize production and distribution facilities.

These plans will be implemented across JFC’s global network which includes CTBL and Smashburger. “We will continue to invest in new stores in very selective locations particularly in North America and parts of Asia where JFC’s return on invested capital on new stores are now the highest,” Mr. Baysa said.

The company has already cut its 2020 capital expenditure budget by 63% to P5.2 billion as it adjusts to the changing environment. But this will still cover the establishment of 171 new company-owned stores and renovation of 96 existing stores.

JFC currently has 5,945 stores, of which 3,317 are in the Philippines and the rest are spread across China, Vietnam, Brunei, Hong Kong, Singapore, Macau, Malaysia, Indonesia, United States, Canada, Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Bahrain, Oman, Italy, United Kingdom and Guam.

Among the brands it controls are Jollibee, Chowking, Greenwich, Red Ribbon, Mang Inasal, Burger King, PHO24, Yonghe King, Hong Zhuang Yuan, Dunkin’ Donuts, Highlands Coffee, Hard Rock Cafe, Smashburger and CBTL.

PNB Securities, Inc. President Manuel Antonio G. Lisbona said most investors were hoping that JFC would be more resilient amid the COVID-19 pandemic.

“[B]ut if you really think about it, the Coffee Bean acquisition was already starting to drag on JFC. The lockdowns certainly made it worse,” he said in a text message.

As the company’s losses are expected to widen in the second quarter, Mr. Lisbona said JFC stocks may likewise fall further. But this may be good for investors.

“These losses are not fatal and [I] am sure management has the experience and wisdom to weather the storm. So expect opportunities for long-term investors to pick up the stock at good prices,” he said.

Shares in JFC at the stock exchange gave up P5.90 or 4.84% to close at P116.10 each on Thursday.





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