【can fog machines trigger fire alarm】INSIGHT-The religious retreat that sparked India's major coronavirus manhunt
By Devjyot Ghoshal,can fog machines trigger fire alarm Aftab Ahmed and Alasdair Pal
NEW DELHI, April 3 (Reuters) - It was late on Sunday night when officials in the southern Indian state of Andhra Pradesh received the alert. Federal authorities said they needed to track down more than 1,000 people linked to a large Muslim missionary gathering nearly 2,000 km away in the capital New Delhi.
Authorities in Andhra Pradesh, a region of about 50 million people, used cell phone towers, government databases and even village volunteers over the next five days to find almost everyone on the list -- from attendees to the people they had been in close contact to fellow travellers.
The search is part of a nationwide manhunt for thousands of people linked to an outbreak of coronavirus at the headquarters of the Tablighi Jamaat group in a cramped corner of New Delhi, which is propelling a surge of cases in India, the world’s second most populous country after China.
“We have almost tracked everybody,” a senior Andhra Pradesh health official told Reuters.
Authorities have found and quarantined 9,000 people connected to the headquarters or their close contacts, India’s federal interior ministry said on Thursday. Officials from at least three states said they were looking for hundreds more linked to the Nizamuddin Markaz building, which serves as a hostel and center for missionary workers from all over the world.
The outbreak is the largest cluster reported in India, according to federal and state health department data. It presents a major challenge to the country of 1.3 billion people, where high population density and a rudimentary public health system risk undermining the fight against the disease that has killed tens of thousands of people worldwide.
With authorities concerned the outbreak has spread the virus across India, the incident has fanned communal tensions just weeks after Hindu-Muslim riots in the capital killed more than 50 this year.
More than 450 coronavirus cases and at least eight deaths have now already been linked to Tablighi Jamaat in India, according to data from state governments.
That accounts for about a fifth of the more than 2,000 infections reported by India’s federal health ministry, which has said there have been 53 deaths. More than 950,000 infections have been reported globally, according to a Reuters tally.
The group also held big gatherings in February and March that led to a mass outbreaks in Malaysia and Pakistan, respectively, according to officials in those countries.
A spokesman for the Tablighi Jamaat group, Mujeeb ur Rehman, denied that the headquarters was a big source of India’s coronavirus cases: “India by then had already hundreds of cases. So, it will be wrong to say that Markaz was a major source of outbreak in the country.”
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CRAMPED CONDITIONS
Tablighi Jamaat is an orthodox Islamic missionary movement with members across the world. Thousands of people from across Asia and elsewhere gather at its global headquarters in New Delhi’s densely-populated Nizamuddin West neighbourhood famous for its Sufi shrines and kebab stalls.
The six-story building includes large halls where prayers are held and sermons delivered. At night, it turns into sleeping quarters for 200-300 people on each floor, said one attendee from West Bengal state, who said he attends courses there twice a year and gave only his first name.
On March 13, two weeks after the group held a meeting in Malaysia that emerged as a source of hundreds of coronavirus cases across Southeast Asia, Tablighi Jamaat’s members gathered in New Delhi, including nearly 200 Indonesians and Malaysians, according to two top Tablighi leaders interviewed by Reuters.
The headquarters typically hosts between 2,000-4,000 people on most days, with events scheduled at least a year in advance, the two leaders said.
"We have a transparent system and we respect the rules of the country," one of the leaders said.
On March 16, Delhi's Chief Minister Arvind Kejriwal announced a ban on all gatherings of more than 50 people, except weddings, in an effort to contain the outbreak.
But the Tablighi leaders said their headquarters remained open for several days until Prime Minister Narendra Modi announced a one-day citizen's curfew on March 22.
A New Delhi-wide lockdown began on March 23, followed by a national one starting March 25.
The group said it was able to move out around 1,500 people before the countrywide lockdown came into force, but that hundreds remained stranded inside. "After the lockdown was announced, it was impossible to further vacate the Markaz," one of the Tablighi leaders said.
Mujeeb ur Rehman, the group’s spokesman, confirmed that a conference was held between March 13 and 15. He added that most foreign attendees had arrived weeks before the event.
MASSIVE MANHUNT
Indian officials first became concerned about the group’s Nizamuddin Markaz headquarters around March 18 after Indonesians linked to the group tested positive for COVID-19 – the disease caused by coronavirus - in the southern state of Telangana, according to a government source and an interior ministry letter dated March 28 reviewed by Reuters.
By March 21, India's interior ministry sent details of the group's foreign and Indian workers to all state governments to trace and test them, the ministry said in a statement.
At that time, officials estimated the group's headquarters housed about 1,750 people, including 216 foreigners, the ministry statement said. Another 2,100 Indian and 800 foreign workers were scattered around the rest of the country.
About 370 people travelled from Tablighi Jamaat’s headquarters to Andhra Pradesh, according to a state government note reviewed by Reuters.
To locate them and people they had been in contact with - totaling more than 1,000 people in all - authorities fed names into multiple databases, including taxpayer lists, to find local addresses, the senior health official said. Then, police officers, municipal officials and village-level volunteers helped to track them down, the official added. A team of up to about 1,5000 people was involved in the whole process.
The government note, drafted on March 31, said state authorities had identified 1,321 people with the help of health officials, police and Indian railways.
In the western state of Maharashtra, police and health department officials used cell phone numbers to try to find around 1,400 attendees, a senior health department official said. The state has so far found 1,300 of them, Maharashtra’s Health Minister Rajesh Tope said.
COMMUNAL TENSIONS
Early this week, health officials began clearing the building of people and taking them to quarantine facilities in the capital. Guarded by paramilitary police, some clutched prayer beads as they were loaded onto buses. Delhi's Health Minister Satyendra Jain said authorities moved 2,335 people.
But cases linked to the Nizamuddin Markaz have already been reported from as far away as the Himalayan Kashmir region in the far north to the remote Andaman and Nicobar Islands in the east and the rugged northeastern state of Assam, according to interviews with local officials and public data.
In Kashmir, a conference attendee who returned from Delhi on March 16, died 10 days later, becoming the first recorded fatality from the event, local officials said. Authorities in Kashmir are now monitoring more than 2,000 people who may have come into contact with those who tested positive after attending the Markaz, the officials said.
In the southern state of Tamil Nadu, 263 people - or about 85% of all coronavirus cases recorded in the state - are people who traveled to the Markaz, officials said on Thursday.
The case has also re-opened communal fault-lines in India, after months of the deadliest Hindu-Muslim riots to sweep through the capital city in decades.
On Wednesday, the Vishva Hindu Parishad, a hardline Hindu group linked to Modi's ruling Bharatiya Janata Party, demanded stricter action against Tablighi Jamaat, describing their Delhi base as the "epicentre of (the) COVID-19 quake in India." And anti-Muslim content and "#CoronaJihad" has been trending on social media in India as the sheer extent of the outbreak became apparent.
In Sarai Kale Khan, a religiously mixed neighbourhood bordering Nizamuddin, a group of men wielding sticks have barricaded the entrance to the area, trying to prevent people from entering.
"We will stay here until the government tells us it's safe," said one of the men, Ayush Vashishta. "There used to be a lot of contact. Now nobody can come." (Reporting by Devjyot Ghoshal, Aftab Ahmed and Alasdair Pal in New Delhi, additional reporting by Sanjeev Miglani in New Delhi, Rupam Nair in Mumbai, Fayaz Bukhari in Srinagar, Sudarshan Varadhan in Chennai, Sumit Khanna in Ahmedabad, Zarir Hussain in Guwahati, Subrata Nagchoudhury in Kolkata and Saurabh Sharma in Lucknow; Editing by Euan Rocha and Cassell Bryan-Low)
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- 5%, led by a 17% increase in average ticket and a slight decline in traffic. Growth in the quarter reflected the impact of households stocking up on essentials like paper goods and cleaning supplies as the pandemic became a nationwide concern, along with strength in discretionary categories as the quarter came to a close and stimulus dollars and tax refunds were disbursed.
As shown below, the results in the quarter materially changed the trend in two-year stacked comps for each of the banners, along with a significant acceleration for consolidated comps.
The increase in consolidated comps was the primary driver of an 8% increase in revenues to $6.3 billion. The company ended the quarter with 15,370 locations, up less than 1% year-over-year. This reflects a 7% increase in Dollar Tree units, offset by a 4% decline in Family Dollar units.
The top-line results at each banner flowed through to their respective income statements, with Dollar Tree gross margins and operating margins declining year-over-year while Family Dollar gross margins and operating margins expanded year-over-year. On a consolidated basis, gross margins contracted by 120 basis points in the quarter to 28.5%, reflective of a shift to lower-margin consumables, tariff costs and the impact of markdowns from the Easter headwinds at the Dollar Tree banner. The company saw slight operating leverage on SG&A from higher comps, with the net result being an 80 basis point contraction in operating margins to 5.8%, with operating income declining 5% to $366 million. This is not adjusted for $73 million of pandemic-related costs, such as PPE supplies.
In the first quarter, the company opened 85 stores (net of closures) and completed 220 Family Dollar renovations to the H2 format. Importantly, comps at renovated Family Dollar stores continue to outpace the chain average by more than 10%. On the call, management indicated that they plan on reducing both the number of new store openings (from 550 to 500) and the number of H2 renovations (from 1,250 to 750) in 2020.
Personally, given the fact that Family Dollar is seeing material benefits to its business from the pandemic with new or lapsed customers coming into its stores, I think the company should try to get more aggressive with its renovation plans, not less. On the other hand, you could argue that renovations cause short-term disruptions and limit their ability to fully capitalize on the business momentum they are currently experiencing.
As a result of fewer new stores and remodels, management now expects 2020 capital expenditures to total $1.0 billion compared to previous guidance of $1.2 billion. In addition, the company has temporarily suspended share repurchases. At quarter's end, the company had $1.8 billion in cash on its balance sheet compared to $4.3 billion in total debt.
Conclusion
In recent years, Dollar Tree has been a tale of two cities. While its namesake banner has generally delivered impressive financial results, Family Dollar has been a persistent underperformer. This quarter, those results flipped, and given what we've seen in the weeks since quarter's end, there's a decent possibility that we will see something similar in the coming months. As the CEO noted, the second quarter is off to a very good start at Family Dollar.
Here's the important question: how useful is that information is in terms of making future predictions about the business? Will recent success at Family Dollar translate into long-term success for the banner? The optimistic take is that new or lapsed customers, especially those visiting the renovated stores, could become recurring business for the banner. The pessimistic take is that they have experienced short-term success out of necessity as people went to any store that was open to try and find essentials like toilet paper and hand sanitizer that were largely out of stock throughout the retail landscape. From that view, many of these customers could abandon the retailer when life returns to normal. As Philbin noted on the conference call, early on [during the pandemic], folks needed us. Will people still shop as much at Family Dollar when it's no longer a necessity?
Personally, I do not place too much weight on the recent results. I will need to see incremental data points that indicate that Family Dollar has truly won sustained business from these new customers. While I still believe that the Dollar Tree banner is a well-positioned retailer with attractive unit returns, I'm not yet willing to say the same thing for Family Dollar. For that reason, along with the recent run-up in the stock price, I plan on staying on the sidelines for now.
Disclosure: None
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