Westlife Development, which runs the McDonald’s chain of outlets, said on Friday that its same-store sales growth (SSSG) has declined 6.9% for the the three months of January-March 2020, while sales growth has suffered a decline of 1.5% on a year-on-year basis.
For the full year ended March 31, 2020, the SSSG increased 4.01%, while sales growth on a y-o-y basis has increased 10.3%. The company said it has strong cash reserves, with `156 crore of investments in various mutual funds and other instruments that can be converted to cash at short notice. Additionally, the company has more than `225 crore of free debt lines available.
However, the company said that the current situation is very unpredictable and evolving daily. “These truly are unprecedented times. However, we continue to operate with a long-term mindset. We are confident of our resilience, but we are not complacent. So while it is difficult to anticipate what a post Covid-19 world will look like, we are taking definitive steps to preserve our financial strength so we are well-prepared for the challenges ahead,” the statement said.
The company said it will be rationalising costs, curtailing discretionary expenses, reviewing capital expenditure and other Q4FY20 items. As part of these steps, Westlife said it is reviewing all investments and reducing expenditures, wherever possible. “For example, our long-term rental agreements, variable rent as a percentage of sales deal etc will help us rationalise rental costs, wherever feasible. Similarly, we are looking at the entire business cost structure to rationalise cost not just for now, but for the long term as well”.
The company is also managing all the costs and reducing expenses that are not critical for business continuity currently. It is reviewing its capital expenditures, and as a result once the lockdown is lifted, it will focus on projects that were underway and were halted due to the lockdown. The company said it will reduce its store expansion guidance for FY21. Also, the company expects cost impacts such as write-offs, wastage, G&A, etc to be included in Q4FY20.
