Select asks landlords for third set of rent cuts
Fashion retailer pushing ahead with new company voluntary arrangement amid fears of store closures
EMBATTLED fashion chain Select has been forced to beg landlords for a third round of rent cuts, after being laid low by the coronavirus pandemic.
The business – which struck a deal last year to keep its 169 branches open following a plunge into administration – is pushing ahead with a new company voluntary arrangement (CVA) to slash its costs again.
It is working with advisers Howard Kennedy on a plan likely to spark fears that store closures and job cuts could be on the cards this time.
Select first went through an insolvency process to slash its rent bill in 2018, then went bust last year and agreed a second CVA with creditors in June. Brokered by administrator Quantuma,
the deal saved 1,800 jobs and Select’s owner Genus was hopeful it could turn the business around.
However, the firm has failed to pay rent since coronavirus hit. Its previous CVA with creditors was automatically terminated on May 8 after an aggrieved landlord demanded payment, and Select is expected to put forward new proposals for a vote this month.
The Covid pandemic appears to have hit as green shoots were showing at the company, with turnover down to £72m for 52 weeks from £116m for the 78 weeks prior in its most recent set of accounts at Companies House, but the business back in profit.
Although the company sells online, it has had to contend with the decline of high streets and changing consumer habits in recent years. When the outbreak took hold it was forced to shut all shops.
CVAs are a controversial form of insolvency that have been employed by retailers and restaurant chains in recent years to negotiate lower rents on their sites.
High street peer All Saints, which came close to collapse during the last recession, launched a CVA to switch most of its stores to paying rent based on how much money each shop makes.
It said this turnover-based arrangement would prevent it from shutting a string of stores.
Chains including New Look, Mike Ashley’s Frasers and entrepreneur Theo Paphitis’s stationery business Ryman have also been asking landlords about a switch or cuts in rents.
A flurry of retailers such as Cath Kidston and Laura Ashley have gone bust since March, while other including Dixons Carphone, WH Smith, John Lewis and Debenhams have cut thousands of jobs between them this year.