The Cave Shepherd group of companies has predicted a rough year for business, with COVID-19 wiping out expected profits.
But its board has expressed confidence the retail and financial services giant can ride out the turbulence and maintain its $41 million cash reserves to provide room to make “strategic moves” under prolonged uncertainty.
In its latest unaudited financial statements for the first quarter ending March 31, chairman Geoffrey Cave and chief executive officer John Williams said the group’s profit attributable to equity holders plunged from $2.9 million in 2019 to just $610,000 this year. The net profit for the period was $861 000, down from $3.4 million for the comparable quarter last year.
The Cave Shepherd Group includes the iconic Cave Shepherd Department store, established in 1906, Fortress Fund Managers, SigniaGlobe Financial, Duty Free Caribbean, Colombian Emeralds, Ganzee, DGM Financial Services, and Cave Shepherd Credit Card Services.
Cave Shepherd shareholders were given early warning that after COVID-19, changes were coming and that it would not be business as usual.
Cave and Williams explained that notwithstanding a “strong start to 2020” in January and February, the COVID-19 pandemic weighed down the group’s overall first quarter performance, particularly its retail businesses and the value of its investment portfolio.
They told shareholders: “Our retail associates, Duty Free Caribbean (Holdings) Ltd. and GCS Ltd. (Ganzee), experienced a significant decline in sales in March as both air and cruise travel came to a virtual halt.
“In early April, Barbados and most Caribbean islands instituted lock-downs to minimise the spread of the virus.
“At the time of writing, our retail stores are closed and our other businesses are largely operating in a virtual environment using digital technology.
“There is no doubt that the COVID-19 pandemic will have huge impact on countries, companies and individuals for the remainder 2020 and likely into 2021.
“As it relates to companies, the focus of the business shifts away from annual returns towards the strength of the balance sheet, and in particular the level of cash and liquid reserves.”
Cave Shepherd expects to report a loss this year, but with cash and liquid assets of $41 million, the company’s leaders said the group was well-position to ride out the storm.
Cave and Williams added: “We have taken the painful, yet necessary measures to reduce our expenses as we prepare for a prolonged period of uncertainty and low economic activity.
“Whereas we are very confident that the Cave Shepherd Group will weather this crisis, we can also say that it will not be business as usual once it has passed.
“Barbados, Barbadians and our company will have to make many changes, and will likely look very different coming out of this period of crisis compared to how we looked going in. But we will come out, and will rebuild for the future.”