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Philippine DIY stores brace for impact of Covid-19

AllHome is reviewing its expansion plan.

AllHome is reviewing its expansion plan.

Home improvement companies in the Philippines warn that a prolonged disruption in business operations due to state-mandated measures that aim to arrest the spread of the Covid-19 respiratory disease in the country would have an adverse impact on earnings and expansion plans.

The Philippine government instituted a month-long lockdown over Luzon, the country's biggest island and home to almost half of the country's 100 million people, 15 March to control the spread of Covid-19. Manila, the country's capital, is in Luzon.

Apart from barring travel by sea, air and land and imposing an 8pm-to-5am curfew, the so-called "enhanced community quarantine" has shut down all but essential establishments such as hospitals, supermarkets, and pharmacies on the island; suspended public transport; and restricted people's movement to essential activities such as doing the groceries. Classes at all levels are cancelled, work for the private sector is either suspended or done from home, while non-essential government services are operating on a skeletal workforce.

"If the situation extends beyond the second quarter of 2020, then it is possible to experience some challenges on selected products and brands," retail conglomerate Robinsons Retail Holdings Inc., which operates Handyman Do It Best in the country, said in a disclosure to the Philippine Stock Exchange.

Property developer and mall operator SM Development Corp., which owns Ace Hardware in the Philippines, told the bourse it was "reasonable" to expect a slowdown in the growth of non-essential categories. But it did not specifically mention whether it expected its DIY unit to take a hit.

Home improvement retailers anticipate a drastic reduction in foot traffic - and revenues - as a result of the restrictions imposed on the movement of people.

While there is as yet no island-wide restriction imposed on residents of either Visayas or Mindanao, the two other island groupings of archipelagic Philippines, key cities in these islands have already instituted their own quarantine measures.

"A decrease in foot traffic as a result of the community quarantine and the scaled down operations of the company may likely impact the company's topline," Wilcon Depot, a home improvement and construction supplies retailer that has 51 stores around the Philippines, told the stock exchange.

Planned store openings may also take a hit if the disruption in business operations persists, DIY retailers say. AllHome Corp., the home improvement company of top Filipino billionaire Manuel Villar, Jr., had plans to expand its selling space to 450 000 m² by the end of 2020 from 313 000 m² at end of 2019. Now, the company is reviewing the plan.

The Philippines' chief economist has said that an economic recession "can't be ruled out" following the imposition of the Luzon lockdown. He said that at the very least, the country's economy would contract in the second quarter.

Official data show that as of 4pm of March 29, 1,418 people in the Philippines - many of whom are from Metro Manila -contracted Covid-19. Of these, 71 have died, while 42 have recovered.

|31 March 2020 | 15:28


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