TIDMDC.
RNS Number : 6329H
Dixons Carphone PLC
26 March 2020
26 March 2020
COVID-19 Trading Update
As a result of the rapidly changing situation regarding
COVID-19, Dixons Carphone is issuing an update on trading, further
to the update issued on 17 March 2020.
In line with Government guidance we closed our stores across the
UK and Ireland from 24 March. This follows store closures in Greece
from 18 March. At present almost all stores in the Nordics continue
to trade.
Our large Online operations remain open. Online trading has been
very strong in all countries over the last two weeks as people have
been preparing to work from home and use essential technology to
continue their lives during the Coronavirus outbreak. Early signs
are that this strong trading has continued since stores closed and
will help to compensate for lost store sales.
There is no bigger concern for our business than our colleague
safety. Over recent weeks we have been taking additional steps to
protect colleagues as we work to satisfy high customer demand for
essential technology products and services. We will stand by our
colleagues throughout this crisis and, with the Government's help,
we expect to keep paying those who work in our stores during these
temporary closures.
We remain committed to our ongoing strategic transformation and
we are determined to continue to create an even better business as
we emerge from this period of uncertainty.
Recent trading
In the 11 weeks from 5 January to 21 March, our Group
Electricals LFL is +8%, which includes a strong recent uplift, with
Electricals LFL sales growth running at +23% in the last three
weeks.
We have seen very good sales of equipment for home working
(laptops, printers), for home entertainment (TVs, Gaming) and for
home living (fridges, freezers, kitchen appliances).
Like-for-like growth 8 Weeks to 29 Feb 3 Weeks to 21 Mar 11 Weeks to 21 Mar
------------------------- ------------------ -------------------
UK&I Electricals 2% 35% 10%
- UK&I Online growth 6% 72% 23%
International 4% 7% 5%
- Nordics 5% 8% 5%
- Nordics Online growth 8% 36% 15%
- Greece 0% -2% 0%
Electricals 3% 23% 8%
------------------------- ------------------ -------------------
UK&I Mobile -11% -24% -15%
Group 0% 13% 4%
------------------------- ------------------ -------------------
Financial guidance
The stores that are now closed were expected to contribute sales
of c.GBP400m for the rest of the year. There will be some recovery
through Online operations but overall the loss of sales will
adversely impact our full year profitability and cash position,
therefore we will not achieve our previous guidance for current
year adjusted PBT of GBP210m or for net debt to be lower
year-on-year.
The COVID-19 situation continues to develop and is likely to
remain uncertain for some time. We will therefore not update
current year or medium-term guidance until the impact of COVID-19
becomes clearer.
Cash control measures
Over the long-term, we do not expect disruption from COVID-19 to
affect the transformation of the business and our ability to drive
future value for our customers, our colleagues, our suppliers and
our shareholders.
However, in the nearer term, because of disruption to sales, we
are aware of the need to preserve cash and have been taking
sensible and prudent measures to do so:
-- Government cost support: Government actions across Europe
including store business rates suspension, payroll support and
lowering of taxes will lower net operating costs. In the UK we
expect to lower costs at a rate of over GBP200m p.a. from the
suspension of business rates and the support of our colleague
salaries.
-- Discretionary spend control: We have already acted to reduce
non-essential spending, including variable operating costs,
marketing and other overheads. The run rate of these items could
total over GBP200m p.a.
-- Capital expenditure commitment: In the current year our Group
capital expenditure will be under our previous guidance of GBP200m.
This spend can be reduced very significantly in 1H 2020/21 which
would cause some delays to the transformation plans but will have
no lasting impact on the long-term success of the business.
-- Working capital: We have reduced our stock ordering
significantly and are in discussion with suppliers to push out
delivery dates. We are also moving mostly to monthly rent payments,
in line with many others in the retail industry.
-- Tax deferral: The UK Government is allowing deferral of VAT
which reduces our near-term cash outflow by around c.GBP140m, and
various tax deferrals in International will reduce near term
outflow by a further c.GBP50m.
-- Dividend: The Group has already declared and paid an interim
dividend for a total of GBP26m. The final dividend is not payable
until September, the Board will consider whether it is prudent to
pay a final dividend at its full years' results when it has a
clearer view on the scale and duration of the impact of COVID-19 on
the business.
These measures represent a substantial amount of discretionary
cashflow that the Group can preserve in order to meet our liquidity
requirements.
Liquidity
The Group has two Revolving Credit Facilities totalling
GBP1,050m provided by major banks which expire in October 2022 and
a term loan of EUR50m which expires in October 2020. As at 20 March
2020, the Group had access to a total of over GBP700m of unutilised
facilities.
The Group also has significant headroom compared to its fixed
charge cover (1.75x) and net debt to EBITDA (2.5x) covenants on the
RCF and expects to comply with these at the next measurement date
in April 2020.
The Group has modelled a wide range of scenarios regarding the
potential impact on liquidity and covenants of the COVID-19
disruption and has detailed action plans in place to respond to
each. We believe that we have sufficient funding capacity available
to meet our obligations over the foreseeable future.
This release contains inside information.
Next scheduled announcement
The Group is scheduled to publish its full year results on
Thursday 25 June 2020.
For further information
Assad Malic Group Strategy & Corporate Affairs Director +44 (0)7414 191044
Dan Homan Head of Investor Relations +44 (0)7400 401442
Tim Danaher Brunswick Group +44 (0)207 4045959
------------ -------------------------------------------- ------------------
Information on Dixons Carphone plc is available at
www.dixonscarphone.com
Follow us on Twitter: @dixonscarphone
About Dixons Carphone
Dixons Carphone plc is a leading omnichannel retailer of
technology products and services, operating through 1,000 stores
and 16 websites in eight countries. We Help Everyone Enjoy Amazing
Technology, however they choose to shop with us.
We are the market leader in the UK & Ireland, throughout the
Nordics and in Greece, employing 28,000 capable and committed
colleagues in the UK & Ireland and 42,000 globally across the
Group. Our full range of services and support makes it easy for our
customers to discover, choose, afford and enjoy the right
technology for them, throughout their lives. The Group's core
operations are supported by an extensive distribution network,
enabling delivery to stores and homes, a sourcing office in Hong
Kong and a state-of-the-art repair facility in Newark, UK.
Our brands include Currys PCWorld and Carphone Warehouse in the
UK & Ireland and iD Mobile in the UK; Elkjøp, Elgiganten and
Gigantti in the Nordics; and Kotsovolos in Greece. Our Dixons
Travel brand has a presence across several UK airports as well as
in Dublin and Oslo, and our services are provided through Team
Knowhow.
Certain statements made in this announcement are
forward-looking. Such statements are based on current expectations
and are subject to a number of risks and uncertainties that could
cause actual results to differ materially from any expected future
events or results referred to in these forward-looking statements.
Unless otherwise required by applicable laws, regulations or
accounting standards, we do not undertake any obligation to update
or revise any forward-looking statements, whether as a result of
new information, future developments or otherwise. Information
contained on the Dixons Carphone plc website or the Twitter feed
does not form part of this announcement and should not be relied on
as such.
This information is provided by RNS, the news service of the
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Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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