Ann Summers lurches towards CVA

  • Ann Summers says a CVA is now likely but not certain as landlords continue to not budge on rental agreements
  • If a CVA did go ahead, it would only apply it to stores where landlords have not agreed to turnover-based rents
  • Ann Summers started talks with the British Property Federation, a move that would likely lead to the launch of a CVA

By guest author Elias Jahshan from Retail Gazette

Caption courtesy by Retail Gazette

Ann Summers has said that it is now likely to launch a CVA after it failed to negotiate better rental terms with some landlords.

The lingerie retailer has now started talks with the British Property Federation, a move that would likely lead to the launch of the insolvency process.

While Ann Summers highlighted that more than half of the landlords across its 90 stores agreed to change to turnover-based rents, the remaining would not budge and make that adjustment.

While a CVA is now likely, Ann Summers said it was still not certain and depended on whether there was a shift in the position of the remaining landlords in the coming weeks.

It said that if a CVA did go ahead, it would only apply it to stores where landlords have not agreed to turnover-based rents.

It comes as the retailer posted a 14.4 per cent increase in sales in the quarter ending September 26.

It added that a lower rental cost base was “critical to ensuring that Ann Summers’ lease portfolio is sustainable in the medium to long term and that our rental outgoings reflect consumer footfall due to the Covid-19 pandemic and an overall shift towards online shopping”.

Ann Summer chief executive Jacqueline Gold said: “Despite all the challenges of the pandemic, our turnaround plan is progressing well and alongside our successful online and direct selling businesses, we believe our stores have a significant role to play in our future plans.

“However, in order to ensure the business’s stability and to protect as many stores and jobs as possible, it is likely we are going to proceed with a CVA to address property costs – both rent and future business rates – which are no longer appropriate in the post-Covid world.

“I hope that we can count on the support of our landlords and their industry representatives as we embark on this process.”

www.annsummersstore.co.uk

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