Dunelm Group plc - Update on current trading and Coronavirus
Update on current trading and Coronavirus
In light of the rapidly changing developments regarding COVID-19,
Protecting our colleagues, customers, suppliers and shareholders
We have been working closely with our colleagues to assess the risks that they and our customers were facing from the COVID-19 outbreak across our business and day to day operations. Yesterday, we had made the decision to close our stores to customers. At that point, we had intended that our stores would continue to offer services to their communities, both as contact-less collection points for Click & Collect orders, and to perform activities which supported local people, such as befriending services and local deliveries to the vulnerable. However, the announcement by the Prime Minister last night has led us to review our approach and we are intending to temporarily close down all of our customer facing operations today in order to understand and comply with the new restrictions and guidelines.
We had already taken significant and decisive actions to support the most vulnerable and lowest paid colleagues in our business, and now we will go further to support the national effort to defeat this pandemic.
At the same time, we have also taken actions to protect the cash resources of the business (which are detailed further below). This includes our decision to cancel the interim dividend, which was due to be paid in April. Our capital policy is unchanged and we remain committed to returning surplus cash to our shareholders. In light of the extraordinary circumstances, the Board believes it is important to retain the cash in the business until further certainty is gained.
Notwithstanding the latest government guidelines, we remain determined to ensure that we use these challenging times to develop a stronger proposition for our customers which will ensure that when this pandemic is over, we have an even better business.
The Group has access to
The Board has taken the decision to draw down in full against its RCF given the heightened levels of uncertainty and will place surplus cash on deposit. The Group continues to expect that it will satisfy its covenant requirements at the FY20 year-end.
Short-term actions to support cash flows
Further to the decisions noted above, the Board has taken immediate actions to protect the cash flows of the business. These actions include reducing capital expenditure and all non-essential operating costs as appropriate.
We are in close contact with our suppliers and are managing our stock requirements in light of latest trading information. We are also liaising with our landlords to improve our rent payments schedule. Our board of directors have agreed to either waive their non-executive fees or to take a reduction in their executive pay for the next three months.
Additionally, we have taken into account the latest guidance from the government regarding their intentions to support businesses through this crisis. Our cash flows will benefit from the business rates holiday (effective
We expect to utilise the government Job Retention Scheme to help fund the pay of our colleagues who may no longer be able to work in the business and we are exploring the scheme which provides additional funding options for corporates.
The situation is very fluid, and we remain focused on balancing the right actions for both the short and longer-term.
For the first ten weeks of the third quarter (ended
During this period, gross margin also continued to improve year on year, in line with the levels observed in the first half of the financial year.
However, over the past two weeks (ended
Prior to the recent downturn, the Group was performing well and in line with our expectations. However, given the uncertain backdrop, we do not think it is appropriate to give financial guidance for FY20 and beyond.
The Board remains confident in the strategy over the longer term and believes
"These are unprecedented times, but
"We have a very strong team in place who are adaptable and committed to ensuring the long-term success of the business. We are navigating the challenges of this situation, acting in the interests of all our stakeholders, and doing the work necessary to ensure that we come through this crisis in a stronger position and with a better business for the future."
For further information please contact:
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07709 496 125
This information is provided by RNS, the news service of the
Quick facts: Dunelm Group plc
Market Cap: £2.47 billion
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