Restaurant Group and Superdry are among a host of retail and leisure chains warning that they will not meet their financial targets for the first half of 2020, as the coronavirus outbreak continues to dent sales.
Revolution Bars
Revolution Bars Group has said the government’s new, temporary rates relief measures “do not go nearly far enough”, even if they are welcomed.
“We hope that there will be further measures in the coming days to provide assistance with payroll entitlements to gain surety for our employees, among other things,” it said.
The firm, which operates 74 bars across its Revolution and Revolución de Cuba brands, expects to see a “material deterioration” in trading for the remainder of the financial period ending 30 June.
To mitigate the impact of Covid-19 and preserve cash, the group said it is taking actions to remove “cost and non-critical capex” from the business.
These measures included suspension of rent and business rates deferral. It will also reduce payroll costs, and variable costs such as entertainment and door staff.
Restaurant Group
Wagamama owner Restaurant Group is predicting a 25% drop in overall turnover on the back of the outbreak.
Like-for-like sales across its leisure, pubs and Wagamama businesses is forecast to plunge by 68% in Q2, including 10 weeks of shutdown.
A significant decline is also expected in its concessions business, which could decrease by as much as 92% in Q2, with significant disruption persisting through the remainder of the year (down 31% during H2).
Group like-for-like sales dropped by 12.5% in the past two weeks. A “material reduction” in revenue and profit expectations for the six months to 28 June is expected to follow.
The group said it would work with landlords across all business areas to ensure no minimum guarantees are enforced within its concessions, where rents are largely turnover-based; and to ensure that the rent roll for 2020 across our other businesses “equitably reflects the unique and unforeseeable situation”.
The forecast assumes at least a 50% reduction in fixed rent across all our Wagamama, concessions, pubs and leisure restaurants, and reflects the business rates holiday for three-quarters of 2020 as part of the government’s new coronavirus measures.
Marston’s
Pub chain Marston’s said it expects a reduction to expectations for its 2020 financial year.
The chain said it anticipated the government’s advice to avoid pubs, bars and similar social venues would result in “significantly lower sales in the coming weeks”.
The company added: “Recognising that tenants and lessees face similar challenges, we have reassured them that we will suspend rent on a case-by-case basis where it is appropriate to do so.
“We have appropriate headroom on both our bank and securitised facilities, supported by a 93% freehold estate.
“As a consequence of this, and the actions we have taken to date, we believe that we have sufficient liquidity to maintain operations at a materially reduced level of business.”
Should reduced social activity continue for several months, Marston’s is unlikely to recommend an interim dividend in May, to retain around £20m in the business.
Superdry
Retailer Superdry has warned it will not meet guidance previously given on 10 January.
It said 78 stores across Europe have been affected by government mandated closures. This accounts for the majority of its European store estate, which contributes around 40% of weekly sales forecasts.
Stores remain largely open in the UK and US, but footfall has been significantly impacted, reducing on average by roughly 25% week on week. The UK represents 50% of its weekly sales forecasts.
“Given the performance to date, we do not expect the decline in sales from our retail stores to be fully mitigated by sales through our e-commerce channel,” it said.
“While we are also pursuing cost saving measures across the business, we do not expect these to be sufficient to offset the sales decline.”
Chief executive Julian Dunkerton said: “We are taking mitigating action wherever we can but the situation is very fluid and uncertain, and we are working to put in place additional financing to secure our recovery.”
Mitchell & Butlers
Birmingham-based Mitchell & Butlers said it expected to see a “significant downturn” in sales following the government’s recommendations to avoid social venues.
Like-for-like sales inched up by 0.9% during the 24 weeks to 14 March at the company, which operates brands including Harvester, Toby Carvery, All Bar One, Stonehouse, Browns, Nicholson’s, O’Neill’s and Ember Inns.
“We are working hard to deliver a performance within these parameters and are encouraged by the measures announced last night by the chancellor, notably business rates relief and access to a credit guarantee facility, which should further underpin our future performance and liquidity,” the company stated.
Inditex
Zara owner Inditex has said store and online sales in local currencies dropped by 24.1% between 1 March and 16 March, with coronavirus having a “very significant impact” on the business.
It has postponed a decision on whether to pay out a dividend relating to its 2019 financial year. Net income generated will instead be allocated to reserves with a view to submitting a final proposal on dividends at a later date.
The retail group has temporarily closed 3,785 stores across 39 markets. All shops in China are open with the exception of 11 stores, following health authority guidelines.
“Although it is too soon to quantify the future impact of the Covid-19 outbreak on our business operations, Inditex has the utmost faith in its business model and its strong financial position,” the group said in a statement.
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