Pret a Manger has ditched its dividend payment to shareholders and warned of “material uncertainties” over whether it can continue as a going concern, saying it was still too early to know the full impact of the Covid-19 pandemic on business.
Shareholders in the coffee shop chain, which permanently closed 74 outlets in the UK last year and 22 in the US, pumped in £185m of additional funding in February and put a further £100m on standby in March as its city centre outlets suffered from the absence of commuters and tourists.
The annual accounts filing for the group, which has also bought the Eat chain in the UK and operates 389 outlets in the UK and 158 overseas, said: “The directors of the group have concluded that there are material uncertainties which may cast significant doubt over the group’s ability to continue as a going concern.”
The uncertainties include another potential lockdown in the UK and the possibility that Pret may not be able to extend an £150m debt facility that runs out in December this year.
“The impact of coronavirus on the global retail and hospitality industry at the date of this report has been severe. Social distancing will continue to change consumer habits for some time, and may permanently affect where, when and how customers choose to enjoy Pret’s food and drink,” Pano Christou, Pret’s chief executive, wrote in his review of the business dated 1 April this year. “It is still too early to know the full impact on the business due to the ongoing uncertainty.”
He said Pret had “fundamentally changed its business model” during the pandemic, expanding home delivery and selling packaged goods online and via retailers.
The accounts, published at Companies House on Friday, indicate that Pret was struggling even before the pandemic hit. Sales at Pret a Manger (Europe), the group’s main trading company, dived to a pretax loss of £26m in the year to 2 January 2020 compared with a profit of nearly £49m a year before. That came as sales slipped to £708m from £710m and it bought the Eat chain.
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The accounts show that Pret a Manger paid shareholders, led by JAB Holdings, an investment fund owned by Germany’s wealthy Reimann family, a dividend of nearly £9.8m in 2019. That was down slightly from £10m a year before.
The company said it had decided to approve the payout after taking into account the group’s strong cash and capital position at the time and its ability to pay its debts. It is understood that Pret does not plan to pay dividends for 2020.
Pret’s accounts document said the firm is confident that it could meet liabilities as they fell due and it is understood that it has not fully drawn down its available facilities – it still has more than £200m in available liquidity.
This content first appear on the guardian