【water in passenger floorboard】US colleges in the crosshairs as coronavirus fears swirl
As coronavirus sickens people across the globe,water in passenger floorboard it has had a profound effect on college students, some of whom have been unable to return to their U.S. campuses. According to a new survey from the Institute of International Education, 37 percent of institutions have said that students were unable to come or return to their U.S. campuses due to coronavirus-related travel restrictions. More than three-quarters of institutions say that outreach and recruiting events in China had been affected. Of the nearly 50 percent of universities that had students scheduled to go to China for study abroad programs in the spring semester, 94 percent had canceled or postponed them. BILL GATES, JACK MA LEAD CORONAVIRUS CHARITABLE GIVING CORONAVIRUS NOT KILLED BY TITO'S VODKA, SO DON'T USE IT FOR HAND SANITIZER, COMPANY SAYS At the University of Connecticut, officials are developing a program that allows admitted students from China to take instruction online for the fall semester and then join the campus in person in the spring. The university also is looking into providing housing over the summer for incoming students from China who are already attending U.S. secondary schools and enrolled students who cannot return home. "We have close to 10 percent of our entering class coming from mainland China. If you're thinking about 10 percent of the class may not actually be able to come for reasons that are beyond our control, that's concerning," said Nathan Fuerst, a UConn vice president for enrollment planning. "We're concerned for students' safety and wellbeing, and we're concerned for the institution and everything they bring to the institution." Schools in the United States, Canada and the United Kingdom have begun offering flexibility on deadlines for testing and application materials, said Derrik Karst of eduFair, a company that connects Chinese students and international schools. In light of the test cancellations, many universities also have begun temporarily allowing students to demonstrate English proficiency through online platforms such as Duolingo. GET FOX BUSINESS ON THE GO BY CLICKING HERE The University at Buffalo, like many U.S. schools, typically sends representatives to China for an orientation session for accepted students and their families. This year, if needed, they are looking into hosting a reception online. Buffalo administrators also are following virus developments closely and fear it could affect domestic enrollment, if students are reluctant to study far from home, and long-term international enrollment of Asian economies are sent into recession. Story continues As of Thursday, there were around 150 confirmed coronavirus cases in the United States. There are more than 95,200 individual cases around the world. CLICK HERE TO READ MORE ON FOX BUSINESS The Associated Press contributed to this report. Related Articles Oprah Winfrey reversed upcoming book selection after controversy Coronavirus crushes Starbucks China sales, hurts earnings expectations Elizabeth Warren reclaims Patagonia jacket from Wall Street View comments
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- 5%, led by a 17% increase in average ticket and a slight decline in traffic. Growth in the quarter reflected the impact of households stocking up on essentials like paper goods and cleaning supplies as the pandemic became a nationwide concern, along with strength in discretionary categories as the quarter came to a close and stimulus dollars and tax refunds were disbursed.
As shown below, the results in the quarter materially changed the trend in two-year stacked comps for each of the banners, along with a significant acceleration for consolidated comps.
The increase in consolidated comps was the primary driver of an 8% increase in revenues to $6.3 billion. The company ended the quarter with 15,370 locations, up less than 1% year-over-year. This reflects a 7% increase in Dollar Tree units, offset by a 4% decline in Family Dollar units.
The top-line results at each banner flowed through to their respective income statements, with Dollar Tree gross margins and operating margins declining year-over-year while Family Dollar gross margins and operating margins expanded year-over-year. On a consolidated basis, gross margins contracted by 120 basis points in the quarter to 28.5%, reflective of a shift to lower-margin consumables, tariff costs and the impact of markdowns from the Easter headwinds at the Dollar Tree banner. The company saw slight operating leverage on SG&A from higher comps, with the net result being an 80 basis point contraction in operating margins to 5.8%, with operating income declining 5% to $366 million. This is not adjusted for $73 million of pandemic-related costs, such as PPE supplies.
In the first quarter, the company opened 85 stores (net of closures) and completed 220 Family Dollar renovations to the H2 format. Importantly, comps at renovated Family Dollar stores continue to outpace the chain average by more than 10%. On the call, management indicated that they plan on reducing both the number of new store openings (from 550 to 500) and the number of H2 renovations (from 1,250 to 750) in 2020.
Personally, given the fact that Family Dollar is seeing material benefits to its business from the pandemic with new or lapsed customers coming into its stores, I think the company should try to get more aggressive with its renovation plans, not less. On the other hand, you could argue that renovations cause short-term disruptions and limit their ability to fully capitalize on the business momentum they are currently experiencing.
As a result of fewer new stores and remodels, management now expects 2020 capital expenditures to total $1.0 billion compared to previous guidance of $1.2 billion. In addition, the company has temporarily suspended share repurchases. At quarter's end, the company had $1.8 billion in cash on its balance sheet compared to $4.3 billion in total debt.
Conclusion
In recent years, Dollar Tree has been a tale of two cities. While its namesake banner has generally delivered impressive financial results, Family Dollar has been a persistent underperformer. This quarter, those results flipped, and given what we've seen in the weeks since quarter's end, there's a decent possibility that we will see something similar in the coming months. As the CEO noted, the second quarter is off to a very good start at Family Dollar.
Here's the important question: how useful is that information is in terms of making future predictions about the business? Will recent success at Family Dollar translate into long-term success for the banner? The optimistic take is that new or lapsed customers, especially those visiting the renovated stores, could become recurring business for the banner. The pessimistic take is that they have experienced short-term success out of necessity as people went to any store that was open to try and find essentials like toilet paper and hand sanitizer that were largely out of stock throughout the retail landscape. From that view, many of these customers could abandon the retailer when life returns to normal. As Philbin noted on the conference call, early on [during the pandemic], folks needed us. Will people still shop as much at Family Dollar when it's no longer a necessity?
Personally, I do not place too much weight on the recent results. I will need to see incremental data points that indicate that Family Dollar has truly won sustained business from these new customers. While I still believe that the Dollar Tree banner is a well-positioned retailer with attractive unit returns, I'm not yet willing to say the same thing for Family Dollar. For that reason, along with the recent run-up in the stock price, I plan on staying on the sidelines for now.
Disclosure: None
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