Fashion retailer New Look has asked landlords to switch rents to a turnover based model on 402 stores as part of a newly launched company voluntary arrangement proposal.
If the proposal is approved, it will enable the retailer to complete a financial restructuring agreed with creditors.
While the turnover percentage on 402 stores will be set at up to 12%, the CVA also proposes that 68 stores pay no rent at all.
Nigel Oddy, New Look chief executive, said: “The proposal to landlords is to rebase our rental cost base through a turnover-based model that aligns future performance and reflects the wider retail market.
“Covid-19 has changed the retail environment beyond recognition, accelerating the permanent structural shift in customer spend and behaviour from physical retail to online, which we have seen in recent trading.
“Despite this, we still fundamentally believe the physical store has a significant part to play in the overall retail market and our omnichannel strategy. We remain committed to the high street and serving our customers through our portfolio of local, conveniently-located stores in towns across the UK.”
New Look said the proposal will relieve the financial pressure on the business as it navigates its way through the Covid-19 crisis.
Oddy added: “Together, the proposed CVA and the financial recapitalisation will provide the foundations for us to deliver our long-term strategic plans, safeguard over 11,200 jobs, and continue to build on the brand status New Look has built over the past 50 years as one of the leading womenswear retailers.”
The CVA meeting date is scheduled for 15 September and approval requires a vote in favour by at least 75% of unsecured creditor votes.
Daniel Butters and Rob Fishman of Deloitte have been appointed to act as nominees to the CVA.
Butters said: “The turnover rent model better aligns the risk and reward of trading during these uncertain times and the CVA, together with the wider-balance sheet restructuring, provides a stable platform upon which management’s strategy can be delivered. It is important to stress that no stores will close on day one, and employees and current suppliers will continue to be paid on time and in full.”
News From: The Retail Bulletin