Thorn Group shares surged more than 54% yesterday after it became the first casualty of the COVID-19 shutdown.
The appliance and electronics lender told the ASX that it’s Radio Rentals division will permanently shut all shop locations across Australia and make approximately 300 staff redundant.
Thorn said the 62 Radio Rental stores and selected warehouses would stay closed permanently, blaming the “coronavirus-driven downturn in the retail sector”.
The shares leap 60% to 13.5 cents. The shares are still down 60% so far this year.
Thorn, which also operates a separate business finance arm, will now move the Radio Rentals brand into a purely online business and focus on enhancing its existing online platform.
“I am disappointed that we have been forced to make hard decisions regarding our staff and store network, however they have had to be made to ensure Thorn Group continues to operate and thrive in the future,” chief executive Peter Lirantzis said in the statement.
“We intend to re-develop both the Radio Rentals’ digital business model and Thorn Business Finance once the COVID-19 crisis has passed.”
Radio Rentals stores first closed on April 2, joining hundreds of other high profile retailers including department store Myer, Premier Investments, Mosaic Brands, and outdoors brand Kathmandu to shut doors in response to the coronavirus outbreak.
But whilst the likes of Myer and Premier’s chains are preparing to reopen by the second week in May, Thorn’s Radio Rentals outlets will remain closed.
Flight Centre is closing more than 400 Australian stores but will continue trading in hundreds of others. Other retailers are expected to take a similar course and use the COVID-19 shutdown to reshape and shrink their businesses.
Meanwhile online group, Carsales.com says it is unable to provide guidance for the current financial year due to the impact of coronavirus restrictions on its business.
“The increased social distancing measures introduced by the government in the last month have impacted sales volumes across the automotive industry,” the company said in a filing to the ASX on Thursday.
The company withdrew its 2020 profit guidance in a statement on March 20 and followed it up with yesterday’s update which was just as gloomy (which is not unusual).
“This has translated to a reduction in buying and selling activity on carsales, impacting the revenue performance across operating segments.”
Given the difficult operating environment, it announced a series of cost savings initiatives, including 250 workers being stood down temporarily.
The company has moved to help customers and dealers.
“In support of carsales’ trade customers and the industries in which the Company operates, carsales has waived all its fixed and variable advertising charges for the month of April and provided a 50% discount in May,” the company said yesterday.
“carsales has also deferred payment of April and May advertising invoices by 30 days. This support package will contribute significantly to reducing dealers’ short term operating costs and demonstrates carsales’ strong commitment to supporting the Australian industry it serves through these difficult times.”
The board and senior management have also reduced their remuneration packages by 20% from April 1 to June 30.
The company said that as at the end of March, it had a net debt position of $355 million, a net debt to EBITDA leverage ratio of 1.6 times and a strong liquidity position with around $190 million in available cash.
FCAI data showed car sales fell 17.9% in March, a far more negative outcome than the 8.2% jump in retail sales (on a preliminary basis) in the same month, according to the Australian Bureau of Statistics.
That rise was mostly driven by supermarkets and electronics goods such as phones, computers, desks and toil paper, rice and pasta.
The shares fell 1.2% to $12.80.
