Shoe Zone furloughs thousands of employees, cancels final dividend
Budget footwear retailer Shoe Zone saw its shares fall as much as 53% on Friday morning after announcing plans to cancel dividend payments.
The final dividend of 8p per ordinary share was due to be paid on 18 March, but the board of directors decided to defer the payment on 17 March in light of the challenges facing the business amid the Covid-19 crisis.
A general meeting will be held in Leicester on 29 April to seek shareholder approval to cancel the dividend completely as it would have cost it £4 million.
This is not the only step being taken by the firm to conserve its cash balances and protect the viability of the business during the government-mandated lockdown.
Shoe Zone, which sells shoes for men, women and children at low prices, was forced to close its 500 stores in the UK and Ireland on 23 March to curb the spread of the virus.
The business, which has approximately 3,500 employees, said that the majority of its workforce has been placed on the government-funded furlough scheme, which means they will continue to receive 80% of their salary during the crisis. Only key workers and the digital teams are currently working.
The brand’s online destination remains open, but it’s operating with some delays.
Against this backdrop, Shoe Zone is expecting to see a significant impact on its 2020 performance, and said it was pulling its previous guidance.
Additionally, all capital expenditure has been ceased and all other costs are being minimised to the lowest level possible. Shoe Zone said it has cash balances of £4.7 million and undrawn banking facilities of £3 million, but if the final dividend is not cancelled, the firm’s financial viability could be in jeopardy.
Shares in the company recovered slightly on Friday and were trading at 61p by mid-morning.
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