The COVID-19 pandemic has sparked an increased public push for schools around Australia to close. School closures will be a huge challenge for parents, especially those that are required to work away from home.
Given these social distancing measures imposed by the government, keeping children entertained during school closures will be one of the biggest headaches for parents and carers.
Certain shares on the ASX will also be feeling the pain of school closures as social distancing measures and reduced demand impact their bottom line. Here are some ASX shares that could suffer from school closures.
Shopping malls and retailers
The first port of call for most parents is shopping malls which offer a range of entertainment facilities. Companies like Scentre Group (ASX: SCG), which owns Westfield shopping centres, bank on school kids and their parents to keep revenue ticking during peak and off-peak seasons.
Social distancing measures mean that parents will most likely refrain from sending their kids to packed malls. This could have a flow-on effect on companies like Scentre as their retail and hospitality tenants struggle to keep their doors open.
Theme parks and entertainment
Theme parks and entertainment facilities like movie cinemas also rely heavily on school holidays for a large portion of their revenue. Again, social distancing measures will mean that companies like Village Roadshow Ltd (ASX: VRL) and Ardent Leisure Group Ltd (ASX: ALG) will find it tough going.
Village Roadshow, which operates Movie World, Sea World and Wet’n’Wild on the Gold Coast, has seen its share price plunge. The company released an update yesterday, informing the market that the COVID-19 pandemic has severely disrupted its businesses. In response, Village Roadshow is contemplating the potential of shutting down its cinemas and theme parks.
Travel and tourism companies
In addition to retailers, shopping malls and theme parks, the ripple effect of school closures in the COVID-19 pandemic will also impact tourism and travel companies. In usual circumstances, travel agencies, hotels and airlines benefit from school holidays as families plan getaways.
Unfortunately, these companies will miss out on cashing in on school closures and foreseeable school holidays. Flight Centre Travel Group Ltd (ASX: FLT) has already felt the pain of the travel restrictions and other social measures imposed by the government. The company’s shares are currently in a trading halt as Flight Centre contemplates a capital raise.
Like the COVID-19 pandemic, it is difficult to predict the full extent of damage school closures can have on ASX shares. For example, Officeworks, which is owned by Wesfarmers Ltd (ASX: WES), could stand to lose some business.
As long-term investors, we will just have to wait it out and look for investment opportunities when the dust settles.
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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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