Kresta stands down workers, shutters stores, as Covid-19 bites

The company, who has booked losses of $30 million over the past two years, announced that the company was temporarily closing all of its stores from Monday 30 March 2020, for an initial period of four weeks until 27 April 2020.

“Unfortunately, the Company has also made the difficult decision to stand down approximately 130 team members from 30 March 2020. Full-time and part-time members will have access to their annual leave and long service entitlements, in addition to government assistance measures,” Xianfeng Lu Executive Chairman of Kresta said in a statement.

“The health and wellbeing of customers, team members, their families and the broader communities remain the Company’s priority. The Company, therefore, fully supportive of the various measures undertaken by the government to prevent the spread of COVID-19 through social isolation and distancing measures.”

The decision is likely to add to the group’s woes; however the business still continues to trade online.

“The Company has been monitoring the potential impact of COVID-19 on its operations and has plans in place to minimise the impact and is well placed financially to sustain short-term disruptions to its operations. Given the uncertainty over the situation, the Company is not in a position to determine the full impact that COVID-19 will have on its operations or quantify any financial impact,” Lu said.

The company has had a small win with its parent company Van Dairy offering a financial letter of support to the Group a maximum of CNY 50 million (AUD $10.4 million), to the extent that money is not otherwise available to meet such liabilities for at least the next 24 months from the date of the 2019 half-year financial report.

In that report, released in early April, Xianfeng Lu said that the ability of the Group to continue as a going concern is principally dependent upon the ability of the Group to secure funds by raising capital from equity markets and managing cash flow in line with available funds.

“These conditions indicate a material uncertainty that may cast significant doubt about the ability of the Group to continue as a going concern. In the event the above matters are not achieved, the Company will be required to raise funds for working capital from debt or equity sources.”

“Based on the cash flow forecasts, the directors are satisfied that the going concern basis of preparation is appropriate. In particular, given the Group’s history of raising capital to date, the directors are confident of the Company’s ability to raise additional funds as and when they are required.”