// Shoe Zone plans to cancel dividend payments as a result of the ongoing coronavirus crisis
// The retailer has also put the majority of its 3500-strong workforce on furlough
// The news led to Shoe Zone shares falling as much as 53% this morning
Shoe Zone has announced plans to cancel dividend payments and confirmed it has furloughed the majority of its 3500-strong workforce due to the ongoing coronavirus crisis.
The news saw shares in the footwear retailer fall by as much as 53 per cent on the stock market this morning.
A final dividend of 8p per ordinary share was due to be paid on March 18, but Shoe Zone’s board of directors decided to defer the payment in light of the challenges facing the retailer amid the Covid-19 pandemic.
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A general meeting on April 29 will be held for the retailer to seek shareholder approval to cancel the dividend completely as it would have cost the business around £4 million.
Shoe Zone also confirmed that it furloughed the “majority” of its 3500-strong workforce, after it was forced to close its 500 stores in the UK and Ireland on March 23 to curb the spread of Covid-19.
The retailer said furloughed staff would be placed on the government’s Coronavirus Job Retention Scheme, which means they will continue to receive 80 per cent of their salary during the crisis, and only key workers and the digital teams are currently working.
Shoe Zone’s ecommerce site also remains open, but operating with some delays.
These are not the only steps being taken by the retailer to conserve its cash balances and protect the viability of the business during the government-mandated lockdown.
It has also dramatically slashed capital expenditure and applied to defer VAT payments.
Shoe Zone said it has cash balances of £4.7 million and undrawn banking facilities of £3 million.
It added that if the final dividend was not cancelled, the retailer’s financial viability would’ve been in at risk.
As a result of the pandemic, Shoe Zone was pulling its previous guidance and expected to see a “material impact” on its 2020 performance.
“The scale of this reduction will depend upon how the situation develops, over what timeframe, and the impact of further public health, economic and business support measures being implemented by the UK and Irish governments,” the retailer stated.