Jarir says sales signal ‘immaterial’ decline in April, May; COVID-19 impact depends on several factors

Jarir Marketing Co.’s (JMC) sales indicated an “immaterial decline” in April and May 2020, compared to the same period last year.

Despite disruptions to the supply chain of certain products, no material impact was witnessed on the company’s operations, Jarir’s Q1 2020 financial statements showed.

Jarir assessed the COVID-19 impact on its consolidated financial results based on available information, and made the necessary adjustments, which mainly included impairment provisions for trade receivables and rental income adjustments through rent reduction granted to eligible tenants.

The company said that no significant adjustments were necessary for impairments of non-financial assets; write-down of inventories to net realizable value, as the current provision was deemed sufficient; actuarial gains or losses on the reassessment of the end-of-service provision; and lease concessions as no material concessions were received in the reporting period.

If the coronavirus and related preventive measures continue to exist in the long term, traffic to the company’s showrooms would be impacted and this will likely lead to a drop in sales and profits. Moreover, material adjustments could be implemented to the subsequent financial statements.

“The group’s operational and financial performance are also likely to be adversely affected by the economic measures taken to support the Kingdom’s finances due to the pandemic, including increasing VAT rate from 5% to 15% from July 1, 2020, suspension of cost-of-living allowance from June 1, 2020, and similar measures that might be taken and which would affect consumer spending, hence, the group’s products,” Jarir added.

The impact of the COVID-19 on Jarir’s operations and financial performance remains uncertain at present and depends on several factors that are entirely out of the group’s control.

These Factors include the outcome and development of the pandemic, the extent and duration of measures imposed or recommended by authorities, economic performance, oil prices, and changes in consumers’ disposable income and spending patterns.