Ann Summers mulls CVA as property costs hit it hard
Ann Summers is the latest UK retailer to be preparing for a CVA as its most recent financial year saw its losses widening and rent costs are proving to be a huge burden. The lingerie-to-sex-toys retailer’s CVA could be launched in the next week or so.
CEO Jacqueline Gold said that some landlords are refusing to work with the company to adjust its rental terms, despite the parent company having pumped more money into the operation to get it back on track after some bruising periods in recent years.
She told Retail Week that the firm’s losses widened to £16 million from £3 million in the 2018/19 financial year. While the performance picked up after the period ended, it’s still particularly worrying given that the year closed before further business challenges like 2020’s lockdown were ever thought of. The extended closure of stores and consumers’ focus on buying essentials only during lockdown are likely to have hit the firm hard and property costs would have been a particular problem.
Gold said some landlords of its 90-strong store estate have taken a “pragmatic” approach, but others are playing hardball and that means a CVA is imminent.
She said that with the government’s business rates relief set to end in the spring, property pressures will only increase. And she called for a move to turnover-based rents.
“We recognise that our landlords are businesses too and we understand they will need a return. I’m pleased to say the majority of ours are sensible and have been open to negotiations,” she told Retail Week.
“However, there are some who haven’t and who continue to bury their heads in the sand when it comes to these discussions. And the way the system is set up, if they won’t come to the table, the only way a retailer is able to resolve the situation is to undertake a CVA.”
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