DFS mulls equity issue to soften impact of extended coronavirus lockdown
DFS has confirmed it is in the process of negotiating additional funding and is preparing a equity issue in order to cushion the blow of the coronavirus pandemic.
The sofa retailer said it was negotiating an additional debt facility of £60-70m with its existing lenders, to supplement the existing bank facility of £250m.
Alongside this additional debt facility, DFS is preparing for a possible non pre-emptive equity issue of up to 19.9 per cent of its existing ordinary share capital.
In addition to these financing actions, the company is cutting its monthly cash operating costs.
The company said its mitigated operating cash outflow is now expected to be “less than £14m per month until the group’s showrooms, manufacturing and distribution operations re-open.”
The group is confident that these measures will give the group “significant liquidity to see through an extended lockdown.”
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Last month DFS reported a nearly six per cent drop in sales in 2019 as footfall at its showrooms slumped. The retailer blamed political uncertainty and a slump in shopper sentiment.
The firm said coronavirus had impacted supply chains and a drop-off in footfall could hurt trading over Easter and the May bank holidays.
In a statement today, DFS said its online gross sales are up 20.2 per cent over the period from 25 March to 17 April. As such the order banks have grown to a total of approximately £192m from £185m.
The retailer confirmed it had in place “all measures that are necessary and appropriate for warehouse activities to operate.”
It added that it intends to restart sofa deliveries “once it is clear there is a safe and workable approach for two-person installations into customer homes.”
Shares are up 9.08 per cent.
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