Section 172 Companies Act Case Study

Our response to the Covid-19 crisis is a practical example of how the Board and the Executive team exercised their duties under s172 Companies Act 2006 during the height of the crisis (March to June 2020).


From the start, we wanted to be able to look back and feel proud that we made the right decisions for our customers, colleagues, suppliers and communities, and of course our shareholders. In the first few weeks, many of the decisions taken were to address short-term or immediate risks, but throughout the crisis we always considered the long-term consequences of our actions.


Colleague safety and wellbeing has always been a priority, and from the start, we put the safety of people (colleagues and customers) first. We had already decided to close our stores on 23 March before the government mandated closure, and we decided to close all of our operations (including warehouses, vehicles, and manufacturing center) on that date until we were able to ensure that they were safe to re-open (our offices had already been closed).

Throughout the crisis we have listened to our colleagues and taken particular care to protect the most vulnerable and lower-paid workers. At all stages, we set government safety guidelines as our minimum standard. We made arrangements for as many colleagues as possible to work from home, including those in our Customer Care Centre. We closed our warehouses, manufacturing center, and home delivery operations until we had put in place physical and procedural social distancing measures, with the advice of an NHS safety consultant. Similarly, we redesigned our stores and installed protective measures for our colleagues (and customers) before we were happy to re-open them. Prior to re-opening any facility, we carefully considered the following: is this legally permitted; have all safety guidelines been met or exceeded; can we successfully operate within these constraints; will this course of action be acceptable to our colleagues, customers and the wider community? All of our colleagues were fully trained in new safety procedures before coming back to work, and we held regular listening groups so that any concerns could be addressed. We also re-opened our facilities in stages, ensuring that we addressed any colleague or customer concerns and applied learnings before rolling out further.

Unfortunately, with our stores closed by government order, we had to put the majority of our colleagues on furlough during the last week of March, and in April and May. To protect their financial wellbeing, we agreed to pay these colleagues in full during March and April, before moving to 80% of pay from May. A fund was established to help those in extreme hardship. We continued to pay all highly vulnerable and vulnerable colleagues, and those with highly vulnerable dependents, in full, and did not ask them to return to work. In July we also agreed to make a ’thank you’ payment of £250 to every colleague employed in the business from March, to thank them for their effort during the crisis, which contributed to our strong recovery.

With so many colleagues working from home or on furlough, we increased our colleague communications. Our CEO, Nick Wilkinson, broadcast a companywide video message once a week, which included a Q&A session and also sent a weekly note. A blog was set up on our internal colleague site ’Home Comforts’ allowing colleagues across the company to raise questions and concerns, and we set up a dedicated team to respond to these. Colleagues working from home or on furlough received a call from their managers at least once a week. We organised community-based charitable activities and fun activities such as companywide competitions and bake offs.


We listened to our customers throughout the crisis, through direct contact and social media. We also monitored consumer sentiment closely. This was factored into our decisions to close and re-open our customerfacing operations. While our stores were closed, we reduced the minimum charge for standard home delivery. We introduced a contactless delivery service, and prioritised improvements to our website that would enhance our customer browsing and purchase experience. We also introduced a convenient and free ’deliver to car’ Click & Collect collection service from our stores, video-based consultations for our Made to Measure curtains and blinds service so that customers could order from their own homes, and a ’virtual shopping’ experience, offering a video-based personal shopping appointment with a store colleague helping select products on the customer’s behalf.


We have worked with a number of our suppliers for many years, and any loss of our sales impacts their business. We decided early on that we would continue to pay suppliers in full, to agreed terms. We communicated regularly with our suppliers, and a number of them supported ourselves and our customers throughout the period of our store closure by increasing the number of home deliveries direct to our customers.


Until the end of March 2020, sales in our stores represented over 80% of our turnover, which have a high level of fixed costs. As soon as our stores closed, we took immediate steps to preserve the cash resources of the business. We reduced capital expenditure and non-essential operating costs. In addition, the Chairman and the Non-Executive Directors agreed to waive their fees for three months, and the Executive Directors, the Company Secretary and all members of the Executive Board voluntarily accepted a salary reduction of at least 20% for the same period (the CEO took a 90% salary reduction). The Board also decided to revoke the interim dividend payment that had been declared in February. In doing so we carefully considered the interests of our shareholders, many of whom include pensioners and pension funds, and colleagues. The decision was fully supported by our majority shareholders, the Adderley family.


Our dedicated charity, Macmillan Cancer Support, suffered a financial shortfall as a result of the crisis. The money that we would normally have collected on their behalf from donations in store, plastic bag sales and from colleague activities also diminished. We have decided to make an additional corporate donation of £105,000 to Macmillan Cancer Support to make up the shortfall to our target of increasing funds raised for charity by 10% in the year. This is in addition to goods with a retail value of £74,000 donated through the Covid-19 crisis, as described below. Colleagues on furlough also volunteered to help self-isolating Macmillan Cancer Support patients. In addition to our support for Macmillan Cancer Support, we set up local Facebook groups around our stores, to co-ordinate assistance, distribute our hampers and care packs, and provide a social network to combat loneliness and isolation. We were also proud to be able to support the NHS and social carers, by manufacturing surgical gowns for two hospital trusts, and cloth masks for a Leicester hospital to cover the surgical masks in a children’s ward to make them less scary; donating furniture for the family room at the Nightingale Hospital in London; and providing a 15% discount to NHS and social care workers via the Blue Light app. Colleagues also sewed wash bags for scrubs to be donated to NHS workers.