The Speciality Retail Group (SRG), the business behind the Suits You chain, has unveiled the details of its proposed Company Voluntary Arrangement (CVA).
The CVA, which affects Suits You and not parent company The Baird Group or any of the other companies within the menswear specialist, will allow SRG to negotiate with landlords on Suits You leases which are losing money.
Under the proposal, landlords of 42 loss making stores will be offered 60% of the full-rent for a period of 18 months. The stores will continue to trade during this period. If the landlords wish to take on new tenants they can do so by giving 45 days notice.
Richard Fleming, UK Head of Restructuring at KPMG said: “We believe this offers the landlords more flexibility and, indeed, is more generous than previous proposals as the reduced rent over 18 months equates to 11 months rent. SRG will continue to pay rates in full.”
For the proposed CVA to go ahead, 75% of all creditors must agree to the terms. A creditors meeting will take place on February 23.
If the CVA proposal is not approved the business will face administration.
The Suits You retail strategy will move towards a designer outlet model with limited high street exposure if the CVA is approved.
The company said the CVA proposal will not result in immediate store closures or job losses.
Landlords of the 29 profitable stores have been asked to move onto a monthly payment schedule for 18 months.
If the CVA goes ahead, it will last for around 18 months.
Peter Lucas, chairman and chief executive of SRG, said:“Unfortunately, despite undertaking a thorough operational restructuring of the business in the past year, we have been forced to take more radical steps. While measures to mitigate the drop in consumer demand on the high street have not been sufficient to bolster the loss-making stores, we believe that the Suits You format can successfully trade in a designer outlet environment with only limited high street exposure.
“The combination, therefore, of refocusing the business onto designers outlets, with a revitalised trading stance, and operational restructuring measures to improve margins and reduce operating costs will make a reorganised Suits You a profitable concern.”
CVAs have become increasingly popular over the last year. Those that have been successful include JJB Sports and Blacks Leisure.
The creditors meeting takes place on February 23 at 12 noon at The London Chamber of Commerce and Industry, 33 Queen Street, London, EC4 1AP.