As we continue to embrace and adopt all measures recommended by the local and global health authorities in all of our markets, we would like to provide an update on the current developments and our internal responses as of today.
- We had announced the temporary closing of all our retail and franchise stores in Turkey, and our retail stores in Germany and Canada as of March 19, 2020. Our stores in Russia are also temporarily closed in line with the Russian government decisions since March 29. Hence as of today, all Mavi stores are temporarily closed in all markets.
- In supporting the employee and public health measures, we have decided to also temporarily suspend all online operations in Turkey as of March 29, 2020. Online and marketplace sales continue in international markets (North America, Germany and Russia).
- Our focus on effective and responsive inventory management coupled with our jeans business which constitutes more than 50% of our product line, has been supportive in dealing with the current disruption more efficiently. Our sourcing, planning, and category teams are working in full collaboration with our suppliers to determine cancellations and postponements for the year.
- Including the basic and ongoing products, around 70% of our inventory consists of less seasonal products that can easily be converted to be sold in the following season. We have been taking all possible actions to minimize inventory related impacts on our financials.
- On the OPEX front, we are looking into lowering our fixed costs as much as possible. The retail industry is considered under force majeure in the current circumstances, which enables us to review many of our contractual obligations. All non-compulsory operational costs and capital expenditures have been cut. With regards to store rents, our negotiations continue with the aim of paying no rent as long as the stores are closed.
- We are a family of 4172 employees, 3844 of whom are based in Turkey as of March 31,2020. We have applied for the Turkish Governments "short-time working allowance" support for the period April 1- June 30, 2020, for all employees in Turkey and awaiting the approval of the Turkish Employment Agency. (The period is set for application purposes only and does not imply that the store closure period has been determined)
- There are similar government support practices in other countries we operate in. Our group company managements are completing all the necessary applications and closely following the respective developments.
- Our low leveraged healthy balance sheet puts us in a strong position in tackling the liquidity challenges with a long-term view. As well as securing the necessary credit lines with banks, we are also facilitating supplier financing options in order to delay immediate payments. Our cash position today is in line with our business continuity scenarios.
- In view of the current uncertain situation due to the Covid-19 pandemic, The Board of Directors considers it wiser to keep all liquidity on hand and has decided to refrain from paying dividend from FY2019 profit. Consequently, the non-distribution of dividends will be proposed to the AGM which is planned to take place in July.
- As a result of the disruption and uncertainty caused by the COVID-19 coronavirus outbreak, we are withdrawing our fiscal year 2020 guidance provided on March 12, 2020, and not providing an updated outlook at this time.
Although it is too soon to quantify the future impact of the Covid-19 outbreak on our business operations, we believe we will get over these difficult times with our strong financial position and our committed and responsive management team.
We remain open communication with all our stakeholders and will continue to inform the public as new developments occur.
This statement has been translated into English for informational purposes. In case of any discrepancy between the Turkish and the English versions of this disclosure statement, the Turkish version shall prevail.