Carpetright closures deal new blow to UK high streets
WILF WALSH, the Carpetright boss, blamed weak consumer spending and too many large stores in bad locations for its decision to close 81 more shops and tap investors for £60m.
Mr Walsh likened the group’s trading problems to the strain in the casual dining sector as he dealt the latest blow to high streets after a string of dire financial reports. “It appears as if consumers have tightened their belts in terms of spending disposable income,” he said. “In that way we’re suffering like some of the restaurant chains.”
Carpetright, which issued two profit warnings in as many months at the start of the year, said yesterday that it would axe around 300 jobs as part of the latest wave of store closures.
Overall 92 sites of the flooring retailer have been earmarked for closure, although 11 have already stopped trading. Rent on another 113 is set to be slashed under company voluntary arrangement (CVA) proposals being put to landlords.
The process heaps more pressure on property owners who have been asked to sign off on a number of CVAs in recent months. They are not obliged to sign off on the terms, and could yet block Carpetright’s proposals. Carpetright will seek approval for the CVA on April 26, and Mr Walsh said he was confident that he would have landlords’ backing, insisting that they had been “pleased with the approach [Carpetright] is taking”.
Carpetright has 416 shops in the UK and 136 in Europe. It hopes to relocate affected staff where possible.
Mr Walsh said: “The problem is we have a number of stores which were opened in the Nineties that are on not very good retail parks in poor locations.” He added that where the company has invested in a new look for stores, overhauling the logo and layout, shops had been performing better.
The group – which employs nearly 2,700 staff overall – also confirmed an investor cash-call to raise around £60m through a rights issue to put it on a firmer financial footing. The money will be used to fund the group’s strategy and reduce its debt, as well as cover the cost of the CVA.
The company still expects to report a loss for the year to the end of April. Carpetright shares tumbled 17pc in morning trade, to 35p, before ending down 8.1pc. The stock has fallen 80pc this year.
Meanwhile, the administrators for Toys R Us confirmed that the brand’s remaining
‘It appears as if consumers have tightened their belts in terms of spending disposable income’
75 stores would close by April 24, with the loss of 2,054 jobs.
Simon Thomas, joint administrator and partner at Moorfields, said: “We are working closely with the 2,000 employees affected by the closures to ensure they receive the support they need for redundancy and other compensatory payments.”
Despite a number of high-profile retail casualties this year, Ed Cooke, head of industry body Revo, said: “A closer look at the retailers facing difficulties will clearly indicate that the recent headlines wrongfully lead many to believe the whole sector is faced with the same fate, when in fact most of those retailers have either failed to evolve or are struggling due to business specific factors.”