Dunelm Group plc (LON:DNLM) has cancelled the payment of its interim dividend and closed all of its shops in order to comply with the tighter restrictions on movement announced by the government overnight.
The Prime Minister said all shops selling non-essential goods should close their doors for at least three weeks,
The homewares chain said it had £25mln of cash and access to £175mln of financing facilities, of which all will be drawn down and placed on deposit, and was reducing capital expenditure and cutting operating costs.
Directors said they continue to expect that the company will satisfy its banking covenant requirements at the year-end.
As well as expecting to benefit from the government’s business rates holiday that will be effective from 1 April, and the deferment of VAT and corporation tax payments, Dunelm said it expects to use the job retention scheme to help fund pay of some staff.
The FTSE 250 group said it was working with suppliers to manage stock and with landlords to adjust the rent payments schedule, while directors have agreed to either waive their non-executive fees or to take a reduction in their executive pay for the next three months.
Given the uncertainty and fluidity of the situation in regards to coronavirus, Dunelm withdrew its financial guidance for the current year and beyond.
Analysts at broker Peel Hunt said that as recent trading had been running ahead of its forecast expectations, the company looked to be coming into the virus lockown "from a position of strength, benefiting from a strong balance sheet position, with a substantial level of headroom".
Taking a conservative approach, the analysts downgraded forecasts to reflect zero store sales over the fourth quarter, which would result in profit before tax falling to £61mln from £140mln, "although critically, the business still generates free cash flow".
"Dunelm remains a key sector pick, now available at an attractive underlying valuation," they added.
Shares in the company were down 2% to 646p on Tuesday, down 44% so far this year.
-- Adds broker comment, share price --