Retail downturn: Clarks seeks rent reductions, Ann Summers gets rent concessions
today Aug 27, 2019
Further evidence of the weakness in the UK fashion retail sector, at least as far as physical stores are concerned, can be seen with news that footwear company Clarks is seeking rent cuts and that lingerie specialist Ann Summers has had a number of rent reductions approved but could close stores where it can’t get a deal.
Clarks has reportedly asked landlords for rent cuts of up to 30% as trading has been weak. The firm is offering to extend its leases in some locations in return for any concessions.
The company hasn’t issued any recent trading figures but its last full-year report (for the 12 months to February 2018) showed operating profits plummeting almost 30% to £29.3 million in a retail environment that was arguably less bleak than it is at present.
But the company remains profitable and with sales in that year of more than £1.5 billion, it seems unlikely to be able to follow the CVA route that so many retail peers have gone down.
The company has said little on the subject of its rents but has reiterated its commitment to physical stores.
Meanwhile Ann Summers has achieved rent cuts on a large number of its 100 stores but not on all of them and that could mean a few closures.
CEO Jacqueline Gold told Retail Week that “there has been a fundamental shift in the retail property market” and that most landlords “live in the real world and understand that circumstances have changed.”
But she said that five stores could end up going through a CVA process, although she remains hopeful that the landlords can be talked round. She also said the company hasn’t been asking for zero rent deals.
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