Core-Mark makes cuts, suspends share buybacks due to COVID-19
The North American company withdraws 2020 guidance amid sales decline.
Core-Mark, one of the largest marketers to the convenience retail industry in North America, provided an update on the impact of the novel coronavirus pandemic.
“Given the level of uncertainty surrounding this crisis and its duration, we are withdrawing our 2020 guidance. Despite an initial retail surge in early March, we have now faced three consecutive weeks of material year over year volume declines,” said Scott E. McPherson, President and Chief Executive Officer.
Core-Mark is taking aggressive steps toward reducing operating costs to better align with the current sales volume trends. Approximately 70% of operating expenses in 2019 were driven by employee wages and benefits. Core-Mark has reduced hours worked for non-exempt employees in addition to making headcount reductions. It has also suspended employer contributions to the Company’s 401-K plan and made material revisions to its vacation policies.
Other measures include eliminating non-essential business expenses including travel, meetings and events and other discretionary expenditures.
For the most recent week ended April 10, 2020, the Company experienced a year over year sales decline of approximately 12%, reflecting a 7% decline in cigarette sales and a 20% decline in non-cigarette sales.
Core-Mark is suspending its share repurchase program due to the volatility related to COVID-19. The Company has approximately $55 million remaining under its $60 million share repurchase authorization.
