4imprint Group PLC (LON:FOUR) today provided a further update on the effect of the COVID-19 pandemic on the Group’s trading and operations.
In our previous COVID-19 update dated 19 March 2020, we indicated that daily order counts had reduced to around 40% of prior year, reflecting the impact of the initial spread of the disease and associated bans on travel and large gatherings. Since then, ‘Safer at Home’ or similar directives in nearly every state in the US and all of the UK have resulted in daily order counts that have been running at about 20% of the 2019 comparative. We anticipate that this limited level of activity is likely to continue until these restrictions begin to be lifted and economic activity starts to improve. Although our locations in Oshkosh, Wisconsin and Manchester, UK are closed, the business is running and we are able to provide service to our customers through an expanded ‘work from home’ capability.
Our people remain our first priority. We continue to operate in compliance with the latest governmental guidelines to ensure their health and safety. In line with our culture, and to enable us to capitalise rapidly on opportunities presented by a future recovery, our plan prioritises the retention of our team members. It is possible that certain government programmes will be accessible to 4imprint to assist in this regard.
Cost control and cash conservation are top of mind in all areas of the business. Discretionary cost, whether overhead or capital, is being tightly controlled in order to provide the business with maximum flexibility going forward. After cost of product, marketing is the largest expense in the business. The marketing portfolio has been radically re-shaped in a very short space of time, resulting in a mix that is appropriate to current circumstances in terms of both type and cost, but equally provides a firm platform to take full advantage of improving conditions when they occur.
4imprint remains in a strong financial position, with significant liquidity available to weather the storm and emerge in a favourable position. At the end of the first quarter of 2020 the Group had over $50m in cash balances. Given the inherent uncertainty as to how quickly markets might recover, and in order to maintain maximum flexibility, the Board has taken the prudent step of withdrawing its recommendation to pay a final dividend in May 2020. The dividend of 59.00c will no longer be paid and will result in extra cash of around $16m being available to the Group. The Board has not fundamentally changed its dividend policy, and it will reassess its position in coming months as the situation becomes clearer.
Whilst we are taking decisive action on cash conservation and are fully engaged in the continuous refinement and execution of our plan to ensure that 4imprint Group emerges in a strong position for the long term, we believe it is still too early to assess the duration and full economic impact resulting from COVID-19. We therefore provide no forward guidance at this stage for 2020.
