B&S Group has revealed it is in ‘close contact’ with airports to finalise the suspension/waiving of lease obligations and concession fees, due to the coronavirus (Covid-19) pandemic.
The Dutch company, which recently released its first quarter 2020 results, acquired electronics retailer Royal Capi-Lux in 2012. It also runs duty free shops in the Netherlands under the B&S Shop Fly branding.
B&S reported a solid balance sheet in Q1 2020 and revealed sufficient credit facilities to cover its liquidity needs, despite the impact of Covid-19.
Organic turnover (at reported rates) dropped -5.3%, while turnover dropped just -1.3% to €420.5m/$460m (at reported rates) or €415.4 (at constant currency). The company’s online business and acquisition of the Lagaay medical supply business, limited the impact of the pandemic on total turnover.
Regarding the retail segment, (which includes the travel retail business) the company said: “With the travel sector being severely impacted by Covid-19 related measures, the sales of our international and regional airport retail activities and cruise shops came to a standstill towards the end of March. The situation continued in the first part of Q2.
UTILISING GOVERNMENT SUPPORT
“By scaling down temporary staff where possible and utilising support from government regulations in countries we are present, we aligned our cost base in this segment with business volume in Q1.”
Market circumstances across the company’s retail activities are unchanged since B&S Group’s last Covid-19 update in April. A dedicated committee, however, has been created within the retail segment to develop and execute an action plan.
The action plan is geared towards bringing cost levels in line with expected sales volumes.
“We do not expect recovery of the retail segment to pre-Covid 19 levels in the short to medium term. The committee is preparing further initiatives to align the organisational structure and cost levels with the expected sales volumes moving forward.”
The company, which says the virus initially impacted its Asian markets at the start of Q1, cites ensuring employees’ health and safety as the main priority during the pandemic.
Additionally, B&S has proactively managed the economic consequences of the virus with a series of cost control measures. The purpose of these measures is to align cost levels with short to medium term turnover expectations.
Measures have been taken to reduce opex (which mainly comprises staff costs) by bringing temporary staff in line with sales volumes. The Group has also utilised government support in countries it is present to mitigate against the effect on its EBITDA levels where possible.
HEALTHY INVENTORY POSITION
B&S said: “Our focus lies on aligning the inflow levels of our inventory with the outflow of our sales and as such decreasing our net debt position. All purchases for our European cruise distribution, for example, were cancelled in Q1.
“In order to maintain our healthy inventory position and receivables portfolio, we are in active dialogue with our diversified supplier and customer base to work towards agreements and solutions where required.
“Our capex requirements for the foreseeable future are limited and our current investment programmes are being re-evaluated to adapt to the current situation in our diversified end markets.”
Bert Meulman, CEO, B&S Group said: “Although it is early days, we began to notice the first signs of recovery in our Asian markets at the end of the first quarter.”
He added: “Our financial position remained solid [in the first quarter] given the ongoing execution of our working capital programme, as initiated in 2019 and cost control measures related to Covid-19. These cost control measures were implemented over the course of the first quarter.
“At the same time, we are continuing our 2020-2022 strategic initiatives with an enhanced focus on optimising internal processes and digitising our operations. This positions us for future business opportunities in specific niche markets and in particular the online channels.”