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New Look 'taking advantage' over CVA, claims landlord

New Look landlord Frogmore has warned that retailers are “taking advantage” of company voluntary arrangements (CVAs) to cut their rent bills.

Frogmore chairman Paul White told The Sunday Times the retailer had tried to cut the rent on a unit he owned, but then allegedly offered to pay more when he decided to cancel the lease instead. 

White told the paper he found it “distressing” to deal with the fashion retailer as it pushed through the CVA with accountancy firm Deloitte.

CVAs are designed to help struggling companies rearrange unsecured debts and increasingly being proposed by retailers such as House of Fraser and Mothercare.

In March, New Look announced plans to shut 60 of its 593 shops and rents in another 393 stores.

Its store at Frogmore’s shopping centre in Stratford, east London, was classified as one of those where an immediate rent cut of 40% was needed to make the site “viable in the medium to long term”.

In its latest annual report, published last week, New Look made an annual operating loss of £152.5m, compared with a £76.4m operating profit in 2017.

The fashion retailer claimed the loss was as a result of “challenging, promotion-led markets in the UK and Europe, the continuing decline in UK high street footfall due to weakening consumer confidence, and the loss of focus on its core customer”.

New Look and landlord Frogmore declined to comment.

Readers' comments (1)

  • CVA's are - in effect - designed so the retailer can take advantage. That's why they are used.

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