Following its announcement that it will cease shipping new comics as of this week, Diamond Comic Distributors informed vendors that it will be unable to make payments as it experiences cash flow problems. This comes from a letter sent to vendors by the Stan Heidmann, president of Diamond's parent company Geppi Family Enterprises. Heidmann attributes to the cash flow issues to no longer receiving payments from customers, which makes sense since Diamond isn't shipping new products to their customers, those customers being direct market retailers. The vendors going unpaid in this case are the publishers and manufacturers that make the products that Diamond distributes, including comics, books, toys, and collectibles. Here's the text Heidmann's message to vendors:
"As the world responds to the outbreak of COVID-19, our focus is on protecting employees, understanding the risks to our business, evaluating the risks to our industry and examining the Federal Government resources available. While the full impact of this epidemic is still unknown, one thing is certain: supply chain disruptions have cash flow implications across the extended industry that can't be underestimated.
While we work to understand the current industry landscape, the unfortunate truth is that we are no longer receiving consistent payments from our customers. This requires that at this time, we hold payments to vendors previously scheduled to release this week. This is a difficult decision and not one we make lightly. As this situation continues to evolve, we are committed to building out a plan for payment and will have more information to share later this week.
Thank you for your patience and understanding during these difficult times."
Steve Geppi, the CEO of Geppi Family Industries, previously released a statement explaining the negative impact the COVID-19 pandemic has had on Diamond's supply chain. "We are hearing from thousands of retailers that they can no longer service their customers as they have in the past, many of them forced to close by government action or resort to in-person or curbside delivery," he writes. "Even those still open are seeing reduced foot traffic in most cases, a situation that seems likely to worsen with time. Our publishing partners are also faced with numerous issues in their supply chain, working with creators, printers, and increasing uncertainty when it comes to the production and delivery of products for us to distribute. Our freight networks are feeling the strain and are already experiencing delays, while our distribution centers in New York, California, and Pennsylvania were all closed late last week. Our own home office in Maryland instituted a work from home policy, and experts say that we can expect further closures. Therefore, my only logical conclusion is to cease the distribution of new weekly product until there is greater clarity on the progress made toward stemming the spread of this disease."