Arcadia Group and Monsoon Accessorize are both expected to put CVA proposals to their landlords next week.
Arcadia Group’s CVA is set to go to creditors on June 5, and could see 23 of its 566 UK and Irish stores close, while rents are renegotiated on a further 194 stores, according to Drapers.
Meanwhile, Sky News reports that Monsoon Accessorize chief executive Peter Simon is set to put CVA proposals to its lenders next week, as he looks for rent reductions on many stores. It reports that both Arcadia and Monsoon landlords are asking for a stake in the businesses in return for a deal on rents.
Both come as the retail industry approaches the June rent quarter day, which traditionally falls on June 24. The retailers are among a number of high street traders, from New Look to Mothercare and Carpetright, that have turned to CVAs (company voluntary agreements) as a way to manage rents that have become expensive in the light of falling in-store sales, and as shoppers move more of their retail purchases online.
One commentator has argued that the move to a CVA would benefit Arcadia, whose brands including Topshop, Topman, Miss Selfridge and Dorothy Perkins.
Richard Lim, chief executive of economics research consultancy Retail Economics, said: “The unrelenting shift towards online, fiercer competition and heightened customer expectations have forced yet another retailer into taking drastic action to try to save the business. These changes are happening at an unprecedented pace and proving too fast for many retailers to cope.
“Arcadia has failed to shift fast enough to a more experience and digitally-led business model, burdened with too many stores, too much space and inflexible lease structures while the impact of rising operating costs has decimated profits.
“But it’s not just fewer stores that are needed to ensure Arcadia’s long-term survival. It ultimately needs a leaner business model, including less staff and fewer brands, as well as investment into its identity and customer experience to fend off online and value retailers.”
Image courtesy of Topman