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Casey's-DoorDash Tie Up to Boost Delivery Amid Coronavirus

Zacks Equity Research
·3 mins read

In the wake of social distancing to curb the spread of coronavirus, delivery service is the need of the hour. During the crisis, Americans are stocking up on essential commodities, which demands expedite delivery services. Thus, companies are leaving no stone unturned to fill the shelves faster as well as improving their delivery service. Likewise, a popular convenience store operator Casey's General Stores, Inc. CASY recently expanded partnership with DoorDash to boost its delivery capabilities.

This agreement helps Casey's delivery to reach out to 579 locations, offering items like made-from-scratch pizza, select appetizers and 20 oz soda. The delivery will be available all days a week. The company also cited that dozens of grocery and household articles will be added by the month’s end. By mid-April, additional items like candy, salty snacks and ice cream will also be accessible through DoorDash. It is also expanding the online grocery range at all outlets.

Prior to the aforementioned partnership, Casey’s had announced its line of action to stay afloat in such unprecedented times. The company had withdrawn its fiscal 2020 guidance. It had even drawn $100 million from its revolving credit facility, following which it had $150 million remaining under its facility. Moreover, management has decided to defer capital expenditures, revisit payment terms with suppliers, lower inventory levels and adjust store operating hours. The company had also announced plans to lower production of prepared foods in order to put a check on in-store stale costs.

On the employee front, Casey’s’ prominent initiatives include increasing pay by an additional $2 per hour of all full-time and part-time store and distribution center team members; additional operational bonuses to key field support associates; additional paid leave for affected members; health checks and others.

We note that Casey’s is on track with initiatives like price and product optimization, loyalty program, digital engagements comprising mobile app and online ordering capabilities, and cost-containment efforts. Although, shares of this Zacks Rank #3 (Hold) company have lost 16.6% in the past three months, they have fared better than the industry’s 26.9% decline.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

All in All

Certainly, online channels emerge as a top gainer due to social distancing and staying indoors measures, with e-commerce king Amazon AMZN being a key player in this respect. The company had announced plans to hire 100,000 employees in the United States to boost its delivery capabilities. It also announced to raise the hourly pay of hired associates in the United States by $2.

Big-box retailers like Target TGT and Walmart WMT also have prominent delivery services and have been undertaking actions to deal with coronavirus-led demand spike. Target has prioritized its actions to resonate well with the prevailing crisis and chosen to cater to Americans’ burgeoning demand for essential commodities now. The company has also increased the minimum wage by $2 an hour until at least May 2 and decided to pay bonus to frontline team executives. Walmart had announced plans to temporarily hire 150,000 additional workers across its stores, clubs and distribution centers to cater to demand amid the coronavirus chaos.

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