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Johnson Service furloughs staff as demand tanks in hospitality sector

By BFN News | 01:27 PM | Tuesday 05 May, 2020


Workwear and laundry services provider Johnson Service said it was continuing to see significant disruption across its markets, prompting it to furlough staff and agree a covenant waiver with its lenders. Organic growth within the company's workwear business for the first quarter overall was slightly negative and trading in April was down around 12%. In the hotel, restaurant and catering division (HORECA), revenue slumped 27% in March and 97% in April, due to the closure of the vast majority of the company's hospitality customers. Johnson Service said it had furloughed a 'significant' proportion of its employees, most notably in the HORECA division. Directors and senior management had taken a 20% pay cut for the three months from 1 April, while the majority of other employees in support and administration roles had agreed a 10% pay cut. The company had previously announced that it was scrapping its 2019 final dividend. 'We are currently engaged in constructive discussions with our three principal banks and have agreed that, although we expect to achieve the June 2020 covenants, they will waive that test,' Johnson Service said. 'No fee has been charged for this waiver demonstrating the strong relationship we continue to have with our lenders.' The company said it was also pursuing a resetting of covenants into 2021 to reflect tough trading, particularly within our HORECA business. At 1:27pm: (LON:JSG) Johnson Service Group PLC share price was -2.3p at 116.5p Story provided by StockMarketWire.com

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