UPDATE ON IMPACT OF CORONAVIRUS
25th March 2020 For immediate release
DFS Furniture plc
UPDATE ON IMPACT OF CORONAVIRUS
Protecting our people, our customers, our suppliers and our business
In response to the UK Government's announcement on 23 March, DFS Furniture Plc ("DFS" or "the Group") provides the following update.
The health and wellbeing of our people is of paramount importance and following the request by the Prime Minister to close all "non essential" retail stores and operations, the Group confirms that it has temporarily closed all of its showrooms, manufacturing and distribution operations in the United Kingdom, Ireland and Spain. Our Group websites will continue to operate to take customer orders.
Protecting our people and our customers
DFS has adhered to the social distancing guidelines set out by the UK Government and its medical advisors. However, the announcement by the Prime Minister on 23 March led us to taking further action with the temporary closure of all customer-facing and manufacturing operations with immediate effect. In addition to showroom and manufacturing facilities temporarily shutting down, we are also suspending deliveries to protect our people and our customers.
During this period, with support from the UK Government's Coronavirus job retention scheme, we intend to maintain employment for our colleagues for as long as possible. Our people are our most valuable asset and we stand by them at this unprecedented time.
Protecting our suppliers and business
In order to protect our financial position we have taken a number of actions and will be taking advantage of the welcome support from the UK Government, including:
· Significantly reducing our marketing expenditure, to reflect the current environment, albeit we have maintained spend where cancellation terms are excessively punitive;
· Pausing all discretionary capital and operating expenditure, including the deferral of six planned new showroom openings in FY21;
· Benefitting from the business rates holiday for retail properties, effective from 1st April, the deferment of VAT payments to HMRC and the potential deferral of PAYE, NI and corporation tax payments, through the Time to pay scheme;
· Seeking to utilise the UK Government's Job Retention Scheme, to fund colleagues who are no longer able to work for the Group in this lockdown period;
· Reducing the usage of consultants and contractors, and implementing a recruitment and training freeze;
· Agreeing with senior leaders of the business to reduce their pay while this shutdown continues, and deferring all annual salary reviews.
We will also be working with our landlords to secure improvements to payment schedules on leased properties. Our mitigated operating cash outflow, during the period of operational suspension, is expected to be c £15m per month from April until we re-open.
As part of this approach the Board of DFS has taken the decision to cancel payment of the interim dividend of 3.7p per share, which was due to be paid to shareholders on 17 June 2020, saving over £8m of cash in June.
Our financial position
The Group has access to a total of £250m of committed bank facilities (maturing in August 2022). As at 24 March, the Group had unutilised immediately available cash resources of approximately £70m .
We also have a customer order book of c £185m, that represents orders that have been taken over the busiest part of our year, post Boxing Day through our Winter sale. Typically this results in c £125m of net cash receipts upon delivery to customers' homes (net of customer deposits and finance subsidy costs). These receipts then fund our outstanding trade creditors of c. £100m as at 24 March.
We intend to seek additional financing facilities to cover the risk of an unwind of the negative working capital balance that is inherent in our business, in the event of a prolonged lockdown, given that we are currently unable to deliver our order bank.
Outlook
Until there is greater clarity about the full impact of the pandemic, we are unable to provide further guidance on our revenues and profits, particularly on the financial reporting period to June. The Board's priority is to protect our people and our customers, to conserve cash and to manage the Group through the Coronavirus pandemic, until further certainty is gained.
With over 50 years of heritage, DFS is a successful business and a leading provider of living room furniture in the United Kingdom. The Group is historically a strong, profitable and cash generative business, that enjoys a strong market position. We are confident that we can navigate this crisis and come back stronger when the economy recovers.
Comment from Tim Stacey, Group Chief Executive
"The welfare of our colleagues and our customers is always our priority. On that basis and in order to help with the Prime Minister's request for strict social distancing we have temporarily closed our showrooms, our manufacturing facilities and our delivery network.
DFS has traded for over 50 years, during which time we have faced many difficult periods including the 2008 financial crisis. On every occasion, thanks to our customers and colleagues, and the long-standing relationships with our suppliers and other stakeholders, we have emerged stronger.
I want to give my thanks to every single one of our people for their extraordinary efforts in managing through this difficult time, I am truly grateful."
Enquiries:
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DFS (enquiries via Tulchan) |
Tulchan |
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Tim Stacey (CEO) |
James Macey-White |
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Mike Schmidt (CFO) |
Jessica Reid |
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Phil Hutchinson (Investor relations) |
Amber Ahluwalia |
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Liz McDonald (Company Secretary) |
+44 (0)20 7353 4200 |
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About DFS Furniture plc
The Group is the clear market leading retailer of living room furniture in the United Kingdom. We design, manufacture, sell and deliver to our customers an extensive range of furniture products. The business operates a retail network of living room furniture stores in the United Kingdom and Europe, together with an online channel, trading through four leading brands. The Group has been established and developed gradually over 50 years of operating history. We attract customers to our stores and website through our substantial and continued investment in nationwide marketing activities and our reputation for high quality products and service, breadth of product ranges and price points and favourable consumer financing options.
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