Discount footwear chain Shoe Zone has said it is holding off on a dividend payment agreed earlier this month because of the economic impact of the coronavirus.
The Leicestershire headquartered company said that following talks with its advisors it was taking the 鈥減rudent decision鈥 to defer payment of the 8p per share 2019 final dividend, that was approved at its AGM on March 5.
The business said its 500 high street and Big Box retail park stores had seen a drop in shoppers since the virus reached the 海角视频.
The company has 3,500 staff.
Shoe Zone said it planned to convene a general meeting in May, when it would propose a resolution to cancel the dividend.
In a statement the business said: 鈥淚n recent days we have seen a reduction in footfall, across our estate, and whilst the full extent of the coronavirus on the short and medium term retail environment is not yet clear, it is becoming ever more apparent that it will create significant disruption to people鈥檚 lives and shopping habits in the coming months.
鈥淭he decision to defer and take steps to propose the cancellation of the 2019 final dividend has been taken with the unanimous backing of the board and is one of number of appropriate measures being implemented to conserve the company鈥檚 cash balances and ensure the robustness of the business to protect it from a sustained period of challenging trading.鈥
Bookmaker William Hill has also suspended its dividends, and said the impact of coronavirus on sporting events could hit its earnings by up to 拢110 million.
Russ Mould, investment director at stokcbroker AJ Bell, said: 鈥淐oronavirus disruption is likely to see many companies temporarily suspend their dividends.
"William Hill and Shoe Zone have already confirmed they are not going to pay the usual cash reward to shareholders and other companies are likely to follow suit, potentially coming in quick succession.
鈥淎 sharp, sudden downturn in trading means management have to think on their feet.
"Cutting jobs is one way of saving money but that is a drastic measure which causes personal devastation for employees and isn鈥檛 the behaviour of a good corporate citizen. Instead, not paying a dividend can be an easier way of saving money on a short-term basis.
鈥淚nvestors may argue they would be losing out yet the coronavirus is an exceptional circumstance. It is causing turmoil around the world and from a moral perspective doing without a dividend is the least investors can do to help protect a company and its workers.
鈥淭o give you some idea of how much companies pay each year in dividends, William Hill鈥檚 most recent annual financial results saw it pay out 拢90 million to shareholders. That covers a lot of salaries for people working in its shops and helping to keep its websites ticking over.
鈥淒ividend bills for many other mid to large sized companies are hundreds of millions, sometimes billions, of pounds a year.
鈥淒ividends are a form of compensation for the risks involved in buying a company鈥檚 shares. Some investors would argue that the dividend is a saving grace when markets fall as at least they are still getting something back despite a drop in the value of their capital.
鈥淔or example, during the last commodities market slump, miners were paying generous dividends to their shareholders as a way of thanking investors for their patience before the next uptick in metal and mineral prices.
鈥淎 one-off suspension of the dividend could give some companies some breathing space if they are financially stretched by the coronavirus disruption.
"However, it mustn鈥檛 be an excuse for any company to stop payments simply because some of the peer group are doing it.鈥
