TIDMDFS
RNS Number : 4696H
DFS Furniture PLC
25 March 2020
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 1(st) 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 GBP15m 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
GBP8m of cash in June.
Our financial position
The Group has access to a total of GBP250m of committed bank
facilities (maturing in August 2022). As at 24 March, the Group had
unutilised immediately available cash resources of approximately
GBP70m .
We also have a customer order book of c GBP185m, 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
GBP125m 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. GBP100m 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:
DFS (enquiries via Tulchan) Tulchan
Tim Stacey (CEO) James Macey-White
Mike Schmidt (CFO) Jessica Reid
Phil Hutchinson (Investor relations) Amber Ahluwalia
Liz McDonald (Company Secretary) +44 (0)20 7353 4200
dfs@tulchangroup.com
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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END
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