Carpetright to shut ten stores across county
No let-up in the misery for retailers on the high street as sales and footfall continue on downward trend
RETAILER CARPETRIGHT has announced plans to close 10 stores in Yorkshire as part of a restructuring plan that could involve the loss of around 300 jobs and 92 store closures around the UK.
The affected Yorkshire stores are Barnsley, Harrogate, Huddersfield, Leeds – Birstall, Leeds – Hunslet, Scarborough, Sheffield – Meadowhall, Wakefield – Cathedral, Wakefield– Westgate and York – Foss Island.
The group said of the 92 stores being offloaded, 11 have already stopped trading.
Carpetright added that the rent will be slashed on another 113 under-performing stores as part of the rescue deal.
The company said it hopes to relocate impacted staff where possible.
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 the firm on a firmer financial footing.
The details came as it revealed a technical breach of its banking arrangements, but the group said it was taking action to address this and ensure it is amended for the future.
Wilf Walsh, chief executive of Carpetright, said: “These tough but necessary actions will enable us to address the burden of a legacy UK property estate consisting of too many poorly located stores on unsustainable rents, and are essential if we are to restore our profitability and deliver a successful turnaround. We will remain in close contact with all colleagues to keep them fully informed as we move through this process.”
Richard Lim, chief executive of Retail Economics, said: “2018 is turning out to be a year of distress on the high street.
“Another high profile CVA shows that the toxic mix of rising costs, softer demand, and seismic structural shifts are pushing many business models to breaking point.
“The move towards online shopping is a critical cog but there are many moving parts. A slower housing market, the rising of the experience economy and a deceleration in the appetite for credit have also hindered the furniture and flooring market.
“For the restructure to succeed, the retailer needs to ruthlessly prioritise the reduction in its fixed cost base and ensure plans to raise capital go far enough to fully support the turnaround plan.”
The firm said trading had remained difficult since its last update on March 1, with the group continuing to expect a small underlying loss for the year to April 28.
It said the CVA – which is a form of insolvency aimed at protecting a business from going bust by cutting its costs – will help it to address the competitive threat from a position of strength. Landlords will vote on the plans on April 26, while shareholders will have their say on April 30.
The rescue deal marks another dark day for the sector, which has already seen thousands of jobs axed following the collapse of well-known names Toys R Us and Maplin.
High street retailers have been hit by a drop in consumer spending, soaring costs and the increasing threat of online competitors.
The British Property Federation (BPF) praised Carpetright for taking early action to address its trading woes.
Stephanie Pollitt, assistant director of real estate policy at the BPF, said: “These situations are never easy as landlords need to take into consideration the impact on their investors, including those protecting pensioners’ savings, as they vote on the CVA proposal.”