Schuh brings in adviser to target cut in store costs
Genesco’s struggling British footwear chain Schuh has reportedly called in a consultancy group, Capa, to examine ways of cutting its rental bill. It has also been working with its long-term adviser KPMG on options.
Rents continue to be one of the largest costs for many retailers and large numbers of them have opted for company voluntary arrangements (CVAs) in recent years as they seek to exit expensive leases early and focus on their most profitable shops.
Schuh has 132 locations in the UK and Ireland but has been facing many of the same problems that have confronted its peers both in the footwear and clothing sectors.
Earlier this summer, the Scottish company said it was closing its physical shops in Germany (although it continues to be available online in that country) and in the spring, its buying director stepped down with immediate effect.
Almost a year ago, the company had reported its latest set of annual results and said that a “lacklustre” festive sales period caused a 10% decline in pre-tax profits for the year to 3 February 2018. That was despite turnover rising. If the same promotional atmosphere has continued, which we can only assume it has, then trading is unlikely to have improved. With Genesco having paid £100 million+ to buy the brand back in 2011, it will clearly be looking for signs that it can be turned around.
Schuh employs 4,000 people and The Times reported that Capa is a specialist in cutting property costs and also worked on administrations for Woolworths, Jessops and Jaeger.
The UK's specialist footwear chains have had as tough a time of it as others in the fashion sector. As well as value-priced giant Shoe Zone recently reporting difficult trading and the departure of its CEO, both Office and Clarks have been looking at options for their store estates. Closures for the former plus rent reductions for the latter seem likely.
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