S.Africa's Woolworths Scraps 2020 Dividend As Coronavirus Hit Deepens
South African retailer Woolworths has scrapped its 2020 dividend and left a question mark over future payouts, with difficult trading conditions created by the coronavirus outbreak expected to persist for some time.
Woolworths said the toll the pandemic has taken on its business had deepened, with turnover and concession sales dropping 18.5% in the nine weeks to 26 April.
Its said the virus had affected performance in all its markets - South Africa, Australia and New Zealand.
The retailer, which has previously warned that full-year profits would fall by more than 20%, said these conditions were likely to continue for the 'foreseeable future'.
'The board will... not declare a final FY20 dividend and will consider dividends thereafter in the context of the conditions prevailing at the time,' it said, adding that it believed this was in the best interest of shareholders.
It reiterated that it was working to protect the group's financial position, improve its liquidity and capital structure and re-position the business towards long-term shareholder value.
This includes a review of its Australasian businesses' debt and property portfolio, it said, with discussions underway with landlords on accelerating the reduction in floor space for its struggling fashion brand David Jones.
It was also talking with its lenders about the potential impact of the coronavirus-related slowdown on its debt covenants, and had secured or was seeking the suspension of covenant testing from lenders to the Australasian businesses.
The group could extend up to 100 million Australian dollars ($66.4 million) in funding support, in the form of a loan, to those units if successful, it said.
The retailer said it would release a further trading update for the year to June 28 in mid-July, when it would give more specific guidance on the expected blow to its profits.