AllSaints 'plans CVA' to achieve UK, US rent cuts
AllSaints will reportedly become the latest British retailer to restructure its business this week with news that it’s to launch a company voluntary arrangement (CVA) on Tuesday. The aim is to achieve rent reductions on both its UK and American store estate.
The fashion retailer, which is owned by Lion Capital, employs more than 3,000 people and Sky News said it has been looking at options for the business since the pandemic began.
The company has over 250 shops in 26 countries and a big presence in Asia. Over half of the £331 million in sales that it reported for 2018 (the last year for which we have figures) came from outside of its domestic UK market and it’s currently unclear how any actions would affect the wider international business.
While neither Lion not AllSaints commented on the story, the report also said that a CVA for its UK and US subsidiary is is seen as the most viable choice with Alvarez & Marsal believed to be handling the process.
But it's believed that there are no plans to close a large number of shops with the report saying that "only a handful" will shut, the main aim being to negotiate rent reductions. The company has around 40 standalone shops in the UK and a number of concessions in department stores, as well as a fast-growing digital operation that represents more than 25% of its sales total. It hasn't yet filed its figures for 2019, but the news story said that it is understood to have seen record sales in that year.
But that was pre-pandemic and with many of its shops having been closed for nearly three months, even a robust digital operation can't make up for all of the lost sales that will have devastated its bottom line since March.
The news about the company comes on the same day as it emerged that TM Lewin's new owners could be planning a pre-pack administration if they don't get substantial rent reductions from landlords. And these are just the latest two in a succession of retailers seeking to negotiate lower rental payments.
While that process may help the survival of many of the UK's best known fashion retail names, it puts the viability of the landlords at risk. Most of the biggest property names have already reported that they've collected only a small proportion of the rents they were due in March and a similar situation is likely to be the case for the rents that are due this month. Property giant Intu is already teetering on the edge of an administration filing if it can't get its lenders to extend its debt terms within the next week.
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