Caffè Nero repays all Covid bank loans
Caffè Nero has reported in a trading update for May that it has repaid all bank loans borrowed during the Covid crisis and that it has been cashflow positive for the last six months.
The company said that it had repaid a £12.2m loan it was extended a year ago by its bank and is forecast to meet all its banking covenants over the coming year. Trading, according to the company, was at 70%-80% of 2019 levels.
Caffè Nero also reported its annual figures for the financial year ending May 2020, in which the coffee chain's directors said "adverse circumstances" including the impact of further coronavirus restrictions and the success of a legal challenge to its restructuring plans would cast "significant doubt" on its ability to trade.
Accounts for the year ended 31 May 2020 showed that in the nine months to February 2020 like for like sales rose 2.3% and the chain opened 11 new stores.
But the impact of the first lockdown from March to May resulted in a loss of over £55m in sales compared to the prior year. As a result Caffè Nero made a loss before tax of £11.7m for the period, down on a profit of £23.1m in 2019.
Chief executive Gerry Ford said: "Sales are picking up and the last quarter has given us a lot of positive momentum. Covid-19, with its government enforced closures and restrictions, made for a challenging 14 months. But we are gaining strength each week. Prior to the pandemic we were trading strongly and had a fantastic track record. We are starting to see that same trading pattern return. Caffè Nero has been cashflow positive for six months despite restrictions and I anticipate the next six months we will move ahead sharply again."
Following the first coronavirus lockdown the company directors took pay cuts of 35% from April 2020 with other head office staff reducing their pay by 10%-30%.
In November last year over 92% of creditors voted in approval of Caffè Nero entering a Company Voluntary Arrangement (CVA). This saw landlords agree to be paid 30p in every pound owed in rent arrears and for many to move to turnover-based rents for the next three years.
However, the CVA is facing a legal challenge from a single landlord and will go to court this summer.
Caffè Nero previously told The Caterer it had "full confidence" in its position ahead of the trial and that sales surged 82% during the 13 weeks to 31 May 2021.
The group has more than 800 stores across the UK and employs more than 6,000 people in the UK.
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