Clarks CVA drive starts with landlord talks on closures and rents
Clarks is to hold talks with its landlords to discuss the retailer’s proposed company voluntary arrangement (CVA) that will include moving to a turnover-based rent model. Central to the plan is closing around 50 of its 347 UK stores and rent cuts for many of the surviving sites.
The negotiations are critical because an agreement on a CVA is conditional on Clarks receiving a cash injection of more than £100m from Hong Kong-based private equity firm LionRock Capital, according to Sky News.
That would mean the founding Clarks family giving up majority ownership for the first time in its near-200-year history.
But the meeting with landlords is expected to be an uneasy one as the subject of rent reductions and stores closures comes at a tough time for both parties hit hard by Covid-19. Clarks’ pension trustees are also expected to play a significant role in any CVA vote.
The proposed CVA comes after the pandemic has devastated UK high street sales, hitting the footwear sector hard. The need to buy or replace footwear for work or social events has diminished since lockdowns began in the spring and has re-emerged in the face of localised lockdowns.
Clarks has already announced plans to to cut around 900 corporate jobs worldwide over the next year, with 108 of them are at the company’s HQ in Somerset, UK. The company noted, however, that around 200 new roles will be created.
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