Jollibee swings to red in first quarter
MANILA, Philippines — Homegrown fast-food giant Jollibee Foods Corp. (JFC) reverted to a loss in the first three months of the year, while a deeper dive in the red is seen this quarter as the start of the lockdowns kept “a high number” of its stores closed.
In a disclosure to the local bourse on Thursday, Jollibee reported a net loss of P1.8 billion from January to March, swinging from a P1.5 billion net profit same period a year ago. Ysmael Baysa, chief financial officer, said “higher losses in the second quarter” when lockdowns are in “full effect,” is certain.
“We expect the business to start recovering in the third and fourth quarters, but we assume that the recovery will be slow,” he said in a statement.
“JFC's financial performance in 2020 will not be a good one,” he added.
Shares in Jollibee shed 3.77% to close at P117.05 each on Thursday, worse than 0.84% decrease in the main index.
As of March, when Luzon was placed under enhanced community quarantine to control the pandemic, Jollibee was forced to shut down 69% of its stores in the Philippines, 6% of its restaurants in China, 23% in Europe, Middle East and Africa, and 16% in North America.
Closures translated to a dismal 1.6% uptick in sales across all Jollibee brands, which include Red Ribbon, Greenwich, Burger King, Smashburger in the US, and its latest acquisition, Coffee Bean and Tea Leaf.
On a monthly basis, the company said sales that grew 15.7% year-on-year in February immediately turned negative and contracted 32.5% annually in March, even as the lockdown in Luzon was just enforced in March 17. This means stores were only closed for two weeks during the current reporting period.
A dismal sales growth pushed down revenues 2.3% year-on-year by end-March, which in turn, translated to a net loss.
That said, Jollibee has moved ahead and announced last week a P7-billion investment plan to boost its delivery segment and support growth at a time movement prohibitions are unlikely to entice people to dine into its 3,317 restaurant outlets nationwide.
While the government evaluates whether to allow people to dine in, even at 50% capacity of restaurants, Jollibee has said it would close down some non-performing stores, open 171 new ones in a “selective basis,” while investing heavily delivery apps to support its business.
“We have to rationalize and re-design our business structure to adapt to the new economic conditions and changed consumer behavior brought by the pandemic and emerge as a stronger business and organization in 2021,” Baysa said.
On the flip side, the Filipino food brand said the company’s cash position was stronger, while 71% of its P25.6 billion in debts are payable over the “long term.” Total liabilities were also 42.9% down from P44.8 billion recorded in end-2019.
“Our strong balance sheet will enable us to withstand this storm, even in the worse case scenarios,” he added.
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