(Alliance News) - N Brown Group PLC said Tuesday its trading has improved since March but has continued to be affected by the Covid-19 outbreak, as it secured new financing arrangements with long-standing lenders.
In the recent six weeks, product sales were down 25%, with Home & Gift sales up 74% but apparel sales down 48%.
The UK fashion retailer considered this an improvement from the levels experienced in March, during which daily product sales fell by more than 40%.
To maximise operating efficiency and preserve liquidity, N Brown has continued operations at its distributing centres at lower levels of capacity than normal, reduced marketing expenses by 80%, significantly reduced capital expenditure, and furloughed 30% of staff.
The group also has frozen recruitment and salaries, and its senior management and board have volunteered to take pay reductions.
N Brown has several financing facilities in place, including a securitisation facility of up to GBP500 million, a GBP125 million revolving credit facility and an overdraft facility of GBP27.5 million.
The group has agreed to new financing arrangements, comprising a three-year term loan facility of up to GBP50 million, the amendment of certain terms and covenants of the securitisation facility, and the widening of certain covenants in its existing revolving credit facility.
Looking ahead, N Brown has put forward various scenarios including one that is "severe but plausible". This assumes a 50% year-on-year drop in product sales for April, May and June, a 45% drop for July and August, and a decline ranging from 25% to 30% for the rest of the group's financial year to the end of February 2021.
Due to the loan facility being under the Coronavirus Large Business Interruption Loan Scheme, N Brown will be prevented from declaring cash dividends as long as it is in place.
"In what remains a very uncertain environment, we have been balancing our number one priority of looking after our colleagues, with a commitment to continue serving our loyal customers, whilst ensuring the business has the resilience to navigate the various challenges we are facing," said Chief Executive Officer Steve Johnson.
"We are pleased to have secured support from both our banking partners and the government's loan scheme, which help to strengthen our financial position and gives us the flexibility and certainty to manage through this challenging period. In addition, the immediate and substantive actions we took at the very outset of this crisis have supported our working capital positively in this period," Johnson added.
N Brown expects to publish its annual results in mid to end of June.
Shares in N Brown were up 9.6% at 20.60 pence on Tuesday in London.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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Brown Group (BWNG)