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Office completes debt restructuring

Footwear retailer Office has confirmed that “no major financial restructuring is being considered” after securing a refinancing sum of £32.5m.

Office’s debt totalled around £42.5m in its financial year ended June 2019. In early July the group announced that it had entered into discussions with UK lenders regarding potential debt restructuring options.

South African fashion retailer Truworths International, which owns Office, has concluded an agreement to refinance its funding. The existing syndicated debt will be replaced with £32.5m provided by Standard Bank. 

Office said the funding has been obtained at more favourable rates than the existing facility, based on the strength of the group’s balance sheet.

It will use existing cash reserves of £10.5m, which are surplus to operating requirements, to settle the balance of the existing debt.

Group chief executive, Michael Mark, said: “Based on Office’s profitability, liquidity and cash position, as well as the successful completion of the debt restructuring, the board wishes to advise stakeholders that no major financial restructuring of Office is being considered.”

Office said uncertainty over Brexit and muted consumer confidence has contributed to a sharp decline in its profitability. Office’s EBITDA for the year to 30 June fell 44% to £12.2m and retail sales decreased by 1% to £254m. Online retail sales grew by 10% to £94m and now comprise 34% of the total. Store sales were down 6%.

As a result, Office has implemented a turnaround strategy to restore revenue, margins and profitability.

The turnaround has four work streams aimed at addressing trading and merchandise, operational and capital expenditure, marketing and brands, and product.

Mark said Office also faces the challenge of managing the balance of online versus physical store sales while being bound by long-term legacy leases. The company’s management is “critically” evaluating the real estate portfolio and plans to close poorly performing stores as soon as it is able to do so.

“Office management is now focused on driving profitable growth by improving staff morale, investing in customer and brand relationships, and improving merchandise processes. We continue to enhance the ecommerce offering to grow sales in an environment trending towards online shopping.”

Office was sold to Truworths International for £256m in November 2015.

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