The Nick Scali Limited (ASX: NCK) share price will be one to watch on Tuesday after the release of an after hours COVID-19 update yesterday.
What did Nick Scali announce?
In response to the COVID-19 outbreak, Nick Scali advised that it has made a number of practical process changes to ensure the business continues to operate in a safe manner whilst minimising the impact to its operations.
These changes include in-store social distancing measures, restrictions on staff travel and meetings, and adopting flexible working arrangements for staff where applicable.
For now, its stores are continuing to operate, although future opening hours remain subject to directions from both the State and Federal governments in Australia and New Zealand.
Supply chain update.
The company advised that feedback from its suppliers suggests that supply chain issues are subsiding and delivery times are beginning to return to normal.
Management expects this will continue to improve over the coming months and position Nick Scali favourably to complete the delivery of its orders in a timely manner.
Trading Update
Nick Scali also provided the market with a trading update.
According to the release, for the first two months of 2020 its written sales order growth was 3% on a comparable store basis.
However, over the last 10 days the company has witnessed a significant decline in both store traffic and sales orders. This is expected to flow through and impact revenue in future months.
As a result, management is currently assessing its operating cost base and will take appropriate measures to reduce expenditure as an immediate priority.
Dividend update.
With cash on hand of $39 million and gross debt of $34 million secured against the property it owns, management believes it has a strong balance sheet.
However, in order to position itself favourably in the event of any prolonged downturn in the retail environment, it believes it is prudent to defer the payment of its previously announced 25 cents per share interim dividend.
Instead of paying it on March 27, management now intends to pay it to shareholders on October 2 2020.
