4imprint cancels dividend as order numbers fall further

(Sharecast News) - Promotional merchandise company 4imprint issued a further update on the effect of the Covid-19 coronavirus pandemic on Tuesday, cancelling its final dividend and withdrawing its guidance as order numbers fell even further.
The FTSE 250 company had said on 19 March that daily order counts had reduced to around 40% of the prior year, reflecting the impact of the initial spread of the disease and the bans on travel and large gatherings.

It said on Tuesday that since then, stay-home directives in nearly every state in the United States and all of the United Kingdom had resulted in daily order counts of around 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," the board said in its statement.

"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."

4imprint said its people remained its primary priority, with the company continuing to operate in compliance with the latest government guidelines to ensure their health and safety.

Its said that to enable its to "capitalise rapidly" on opportunities presented by a future recovery, its plan prioritised the retention of staff, adding that certain government programmes could be accessible to the firm in that regard.

Cost control and cash conservation were also described as "top of mind" in all areas of the business.

The company said that discretionary cost, whether overhead or capital, was 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 firm, with 4imprint explaining that its marketing portfolio had been "radically reshaped" in a short space of time.

The result of that was described as a mix that was appropriate to current circumstances in terms of both type and cost, but equally provided a platform to take full advantage of improving conditions when they occur.

4imprint said it remained 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 more than $50m in cash balances.

It said that, given the inherent uncertainty as to how quickly markets could recover, and in order to maintain maximum flexibility, the board had decided to withdraw its recommendation to pay a final dividend in May.

The dividend of 59 cents would no longer be paid, and would result in extra cash of around $16m being available.

4imprint's board said it had not fundamentally changed its dividend policy, and would reassess its position in the coming months as the situation became 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 the 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," the board said.

"We therefore provide no forward guidance at this stage for 2020."