The coronavirus outbreak has prompted a growing number of retailers to temporarily close their stores to help slow the spread of the virus. Earlier this week V.F. Corp (VFC) announced plans to shutter its North American stores through April 6 in addition to previously announced closures throughout Europe and Asia. With revenue set to take a big hit for at least several weeks, retailers must decide how cautious to be with preserving capital.  Company-owned stores account for about 30% of V.F. Corp's revenue and provide the biggest hit to profitability when demand drops due to their high fixed costs. Online sales contribute another 10% and could be relatively more resilient during this period, but the remaining 60% of sales are generated from selling its [...]

The novel coronavirus outbreak has triggered temporary store closures and social distancing restrictions designed to slow the virus' spread.  The end result has been unprecedented disruption for most of Sysco's food distribution customers, including restaurants (62% of sales), hotels (9%), and schools and governments (9%). Based on the analysis shared below, we are downgrading Sysco's Dividend Safety Score to Borderline Safe and plan to sell the shares of Sysco that we hold in our Conservative Retirees portfolio on Monday, March 23. To show how rapidly the operating environment has changed, OpenTable, a widely-used online reservation platform, reported a 92% year-over-year drop in restaurant bookings in the U.S. for Thursday, March 19. As you can see, the trend has significantly accelerated over the last 10 [...]

The coronavirus outbreak has prompted a growing number of retailers to temporarily close their stores to help slow the spread of the virus. On March 19, TJX (TJX) announced actions it was taking in response to "the rapidly changing market uncertainty" caused by the global pandemic. The off-price retailer stated it was closing practically all of its stores for two weeks, as well as its online businesses, distribution centers, and offices. As expected from a well-respected operator like TJX, the firm plans to pay its impacted associates for two weeks during these closures. No one knows how quickly stores will ultimately reopen, but there's a very non-zero chance that closures last well beyond a couple of weeks as more dramatic social distancing actions are mandated across [...]

The coronavirus pandemic and oil-price war have weighed on the short-term outlook for Magellan Midstream Partners' (MMP) business. The firm generates about 55% of its operating profits from transporting and storing refined petroleum products such as gasoline and diesel fuel. This has long been a nice cash cow business because demand trends are stable and growth is low, providing consistent throughput while discouraging others from constructing rival pipelines. Due to the predictability of fuel consumption, Magellan's refined products operations have never really been a contract-driven business.  Last year only about 40% of shipments on Magellan's pipeline system were subject to agreements with shippers dictating payment, volume, or term commitments. These deals only had an average remaining life of three years, [...]