More gloom on the high street
HIGH-STREET gloom deepened yesterday as Carpetright flagged store closures, Moss Bros sounded a profit warning and Mothercare scrambled to raise funds after a reprieve from its lenders.
Up to a quarter of Carpetright’s 409 UK outlets could be shut as the retailer battles to get its finances back on track after paying the price for expansion under previous management.
It has arranged an emergency shortterm loan of £12.5million from 12 per cent shareholder Meditor in return for an additional 5 per cent stake and is considering a company voluntary arrangement under which it could negotiate lower rents with landlords as well as closing shops. It would then look to raise up to £60million from investors to reduce debts and rebuild the business.
CEO Wilf Walsh, who has overseen a slimming down of Carpetright’s estate from 472 when he took charge in 2014, said: “The aggressive store opening strategy pursued by the company’s previous leadership has left Carpetright burdened with an oversized property estate consisting of too many poorly located stores on rents that are simply unsustainable. The company has worked hard over recent years to address this legacy issue and reduce the size of its property estate, however many of these poor performing stores still have long leases to run.”
Men’s tailoring firm Moss Bros warned that profit for the year to next January would be “materially lower” than current market expectations after a shake-up of its suppliers led to a stock shortage which is denting sales.
Mothercare has been given more time to secure extra funding after its lenders deferred testing of its financial covenants which had been due this weekend. Talks are expected to conclude in May and it is exploring additional sources of financing.
New Look is set to close 60 shops with the loss of up to 980 staff. The fashion chain’s company voluntary arrangement proposal was overwhelmingly backed by its creditors and landlords.
It will try to redeploy affected staff within its business, which operates from nearly 600 UK outlets.