// DFS reveals range of initiatives to address impact of store closures & business disruption due to Covid-19
// This includes DFS leaders taking a pay cut and a suspension on deliveries
// DFS is also cutting back on marketing and capital expenditure, pausing production, and seeking government aid
DFS has revealed that senior directors will take a pay cut as part of measures to help the furniture retailer mitigate the economic impact of the coronavirus pandemic.
The retailer’s other measures include significantly reducing marketing costs, freezing recruitment, deferring all annual salary reviews and cancelling dividend payments to shareholders, pausing all discretionary capital and operating expenditure, and a deferral of six planned new showroom openings.
DFS also confirmed it has temporarily closed all of its stores in response to the government’s order on Monday night that all non-essential shops must close as the UK grapples with the pandemic.
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The furniture chain also said it temporarily closed its manufacturing and distribution operations, and while its websites will continue to operate to take customer orders, deliveries have been suspended.
Meanwhile, DFS said it was pursuing government support, including a business rates exemption for 12 months, a deferral of tax and national insurance payments, and access to the coronavirus job retention scheme – which includes an offer to cover up to 80 per cent of wages for staff unable to work during the lockdown period.
DFS added it was also working with landlords to secure improvements to payment schedules on leased properties.
The retailer said that its mitigated operating cash outflow, during the period of operational suspension, is expected to be around £15 million per month from April until it re-opens.
DFS also said it has £250 million of committed bank facilities, which matures in August 2022, as well as unutilised immediately available cash resources of approximately £70 million.
In addition, the retailer has a customer order book of around £185 million, which it expects to result in around £125 million of net cash receipts upon delivery to customers’ homes, which in turn would fund DFS’s outstanding trade creditors of around £100 million as at March 24.
“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,” the retailer stated.
DFS was unable to further guidance on our revenues and profits, particularly on the financial reporting period to June, until there was greater clarity about the full impact of the pandemic.
“The welfare of our colleagues and our customers is always our priority,” chief executive Tim Stacey said.
“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.”
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