Managing stakeholder relationships – Office®
Shareholder
Rationale for engaging: Truworths International is the controlling shareholder of the Office business and the board of Office Holdings Ltd is responsible to the board of Truworths International. Engagement is managed by the executive directors of the businesses.
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Key engagement |
Response to |
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The sustainable turnaround in the performance of Office and ensuring its long-term viability against the background of the COVID-19 pandemic and related lockdowns, which have had a crippling impact on the UK retail sector; declining revenue from stores as consumers increasingly migrate to online shopping; and logistical challenges due to the aftermath of Brexit and the impact of the global pandemic on shipping. |
The Group remains committed to maximising the value of its investment in Office. Early in the reporting period the Group provided funding to Office through a £6.5 million 15-month secured revolving credit facility. The Group continues to oversee the turnaround plan within Office (refer to Material Issues, Risks and Opportunities for further detail on the turnaround plan). |
Customers
Rationale for engaging: Customers are the buyers of merchandise and the primary source of revenue for Office. Engagement focuses on customers in the UK, Germany and Republic of Ireland, and both national and international online customers. Engagement occurs informally in stores and via the e-commerce sites as well as through social media platforms such as Facebook and Instagram.
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Key engagement |
Response to |
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Based on Office’s user feedback survey, customers would like ‘buy now, pay later’ options in respect of their online purchases. |
Office will be introducing a ‘buy now, pay later’ payment system on its website which will allow customers flexible payment options on their purchases. The payment arrangement is between the ‘buy now, pay later’ provider and the customer, and Office carries no payment risk. |
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Customers would like to see images on the website of models wearing Office’s shoes, rather than merely displaying images of the products. |
Office plans to introduce images on its website of shoes being worn by models. |
Employees
Rationale for engaging: Employees provide their talent and skills to ensure the business operates in an efficient and sustainable manner. Engagement includes all full-time and flexi-time employees, with line management being the key point of engagement, supported by the Human Resources Division. Employee engagement occurs through formal communication and surveys, formal and informal training, personal interaction with line management and through direct communication with the Managing Director.
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Key engagement |
Response to |
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Impact on employees who were not able or required to work from home during lockdown. |
Head office employees in key roles were required to work from home on reduced hours and salaries, and those who were not required to work were furloughed. All store and field-based staff were furloughed. |
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Financial impact on employees who were not required to work during lockdown. |
Office applied for government aid funding for all qualifying furloughed employees. |
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Employee well-being |
Well-being discussions are conducted with all staff, acknowledging the impact that COVID-19 has had on the population in a bid to try and alleviate concerns and address any issues that may have arisen from the pandemic. |
Suppliers
Rationale for engaging: Suppliers are the providers of merchandise and other goods and services, including international suppliers of branded and own-brand merchandise, and landlords. The primary sources of contact are executives, merchandise buyers and management. Engagement occurs formally and informally through merchandise design and order negotiations and account management interaction and through collaboration on mutually beneficial alignment with key brands.
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Key engagement |
Response to |
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Merchandise suppliers: |
The impact of order cancellations was largely mitigated by the decline in sales due to the second and third lockdowns. |
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Office’s constrained cash flow and liquidity position resulted in credit insurance being withdrawn so suppliers had no guarantee of being paid for merchandise orders. |
Office communicated extensively with suppliers during this period and agreed new payment terms. In the case of certain smaller branded partners where terms could not be reached, the supply relationships were ended. |
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Property landlords: |
In the COVID-19 lockdowns Office was granted rental holidays, rent reductions and more favourable terms in respect of certain leases. UK landlords are under significant pressure due to high vacancy rates owing to the high number of company voluntary arrangements and liquidations as a result of the COVID-19 pandemic, which frustrated landlord discussions and negotiations. Several short-term flexible rent deals were negotiated with landlords in respect of leases that expired during the period. |
Regulators
Rationale for engaging: Regulators are the custodians of legislative and regulatory compliance and providers of licences to trade. This includes government departments, regulatory bodies and local authorities, with the engagement being managed by the executive directors as well as finance and legal executives. Engagement occurs through regulatory filings and submissions, and formal and informal discussions regarding key issues.
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Key engagement |
Response to |
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Applications for UK Government relief in respect of employee retention. |
Approximately £4.3 million in employee retention benefits received following applications to relevant government authorities. |
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Applications for government lockdown and reopening grants. |
Approximately £1.3 million in lockdown and reopening grants were awarded following applications to each relevant local authority. |