The outbreak of Covid-19 and subsequent government prescribed lockdown have had a significant impact on JSE-listed lifestyle investment company Long4Life’s various businesses, CEO Brian Joffe told shareholders during an annual general meeting on July 1.
The requirement to close all retail store premises during the initial Level 5 lockdown resulted in a materially lower revenue in the sport and recreation division.
However, since restrictions were eased to Level 3 in early June, Sportsmans Warehouse has traded well across all categories of stock, save for team and school sports gear.
Outdoor Warehouse’s trading has been muted owing to the stringent travel and holiday restrictions, but online sales in the sport and recreation division have been particularly pleasing in this period, Joffe said.
The alcohol ban and continued lockdown of restaurants, hotels and gatherings, however, has also negatively impacted on demand for Long4Life’s beverage division’s products and services.
However, Long4Life is currently experiencing stronger sales following the partial lifting of the alcohol sales ban in June.
The personal care and wellness division, meanwhile, was also negatively impacted as salons remained closed until June 22.
Sorbet has, in the interim, provided its franchisees assistance in the form of food vouchers for about 3 500 of the franchise’s employees, the waiver of a portion of the franchise fees and financial assistance in the form of loans to acquire personal protective equipment.
Sorbet has since opened its doors in the past week and trading is “promising”, Joffe noted, adding that the ClaytonCare sub-acute facilities are experiencing lower occupancy levels as patients choose to postpone elective surgery and other procedures.
During the first two months of the lockdown, Joffe said the company had initiated “extensive marketing campaigns” in all its divisions to maintain consumer awareness across its brands and ensure “they remain top of mind”.
Overall, however, the group’s primary financial objective has been to focus on stringent cash management without damaging the long-term outlook of the businesses. According to Joffe, “this strategy has been successful to date”, with the group’s balance sheet remaining resilient with robust cash on hand.
Cash balances are currently at similar levels to those at February 29.
In determining the anticipated results for the six months to August 31, Joffe lamented that the financial impact of Covid-19 will be exacerbated by the fact that businesses are “highly seasonal” and that trading in winter is less than trading in summer months.
In addition, April, which had no trading at all owing to the hard lockdown of Level 5, is “traditionally a strong trading period for the group” as the businesses benefit from the holiday period.
Given the negative trading experienced to date and the current continued uncertainties, “it is not possible to provide any meaningful guidance on the group results to August 31”, Joffe said.
The Long4Life group, however, is unlikely to make a trading profit in the six months.
“Going forward, we believe the medium-term outlook remains positive for our businesses and we are confident that we produce a reasonable return in the second half of the financial year,” he commented, adding that the company’s businesses “have well regarded brands that remain desirable to consumers and relevant in a post-Covid-19 environment”.