Se­lect asks land­lords for third set of rent cuts

Fash­ion re­tailer push­ing ahead with new com­pany vol­un­tary ar­range­ment amid fears of store clo­sures

The Daily Telegraph - Business - - Business - By Laura Onita

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.

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