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New Look targets 60% store rent cuts

New Look reportedly wants its landlords to slash store rents by up to 60% as part of its rescue plan.

The retail chain is known to be considering a company voluntary arrangement (CVA), which would allow it to shed unprofitable stores and negotiate rent reductions with landlords.

The retailer has split its 600 stores into three groups based on performance, according to Retail Week.

It is said to be proposing a move to pay landlords 40% of rent owed on its 70 worst-performing stores, reserving the right to close these.

It is also thought to be asking the owners of another 380 stores to agree to cuts of between 20% and 60% for three years. The process would not affect its top-performing 150 stores.

New Look must first gain approval from its bondholders before it can proceed with a CVA, since it is backed by private equity.

A spokesman for New Look said: “The company has previously indicated that a potential CVA is being considered as part of a range of options to improve the operational performance of the business. No final decision has been made regarding a CVA, which would require consent from our creditors.

”The company is requesting permission from bondholders to make changes to the terms of its secured bonds to facilitate a CVA proposal as it evaluates this option.”

In its most recent set of financial results for the 26 weeks to 23 September 2017, total revenue was down 4.5% to £686m and adjusted EBITDA plunged 72.2% year on year to £24.2m.

It posted an underlying operating loss of £10.4m, compared with a £59.3m profit in the same period the year before.

 

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