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Profit warnings from firms in Europe mount as Covid-19 bites | Business


A string of retailers, pub and restaurant groups in the UK and across the rest of Europe have issued profit warnings as the coronavirus pandemic takes a mounting corporate toll.

Inditex, the Spanish retailer that owns chains including Zara, has taken a €287m provision in relation to the virus. The company, the world’s largest fashion retailer with brands including Bershka and Massimo Dutti, said sales in its stores and online plunged 24% between 1 and 16 March.

The company has suspended its dividend to shareholders and will divert the cash to strengthen its balance sheet. As the world goes into lockdown, the group has closed 3,785 stores in 39 markets. In total, it has 7,469 stores in 96 markets.

Sodexo, one of the world’s largest catering groups, warned the virus could cost €2bn in lost sales. The French company, which has clients including Ascot Racecourse and the US Marine Corps, suspended its annual forecast.

Several UK pub and bar chains joined the chorus of warnings on Wednesday, with the government’s call for the public to stay at home in effect halting social life in Britain.

  • Restaurant Group, the owner of Wagamama, said sales were “getting worse by the day” and forecast revenues down a quarter this year. The company expects profits to drop by almost a third, to between £95m and £105m. It is pushing through cost cuts of £45m this year, reducing capital expenditure by almost half, from £75m to £45m, talking to landlords about a 50% reduction in fixed rent, and talking to lenders about “covenant holidays”.

  • The pubs group Marston’s, known for its Hobgoblin and Lancaster Bomber beers, expects a significant fall in sales in the coming weeks. The company said it was unlikely to pay out its £20m interim dividend and has had “constructive” discussions with lenders about covenant waivers in the second half.

  • Mitchells & Butlers, which owns the All Bar One, Browns and Harvester chains, said recent trading had been “severely impacted” by the spread of the virus and it would no longer provide guidance on financial performance for the year. M&B is cutting costs and reducing capital expenditure.

  • Revolution Bars Group warned of a “material deterioration” in trading this year. It is taking measures, including areduction in payroll costs and cutting entertainment and door staff. Revolution said that it was “exploring all options” as it continued to monitor funding requirements.

  • The beleaguered retailer Superdry warned investors it would not meet its guidance of £5m to £6m in sales per week it forecast in January. The company said 78 of its stores across Europe had been temporarily closed. Stores remain largely open in the UK, which accounts for 50% of sales, and the US, but customer traffic is falling on average by 25% week on week as the virus spreads. Superdry is “in dialogue” with lenders to “provide additional flexibility and liquidity”, as it cuts costs and suspends capital expenditure.

  • On Monday, Debenhams asked landlords for a five-month rent holiday. The owner of the fashion chain Primark, Associated British Foods, said the outbreak would hit sales across Europe. It said 72 stores accounting for 20% of selling space were now closed in Italy, France, Spain and Austria.

  • Shares in Pendragon slumped more than 20% to their lowest point in more than a decade, as Britain’s biggest car dealer warned of the impact of coronavirus. While it does not expect any significant disruption to the supply on new vehicles until the autumn, the chief executive, Bill Berman, said: “As the virus spreads across the UK then this will likely influence the willingness of customers to visit our dealerships, which could affect our financial performance.”



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