Ann Summers seeks rent reductions - report
Lingerie retailer Ann Summers has become the latest big name to seek rent reductions from its landlords as the physical retail sector in the UK continues to be battered by weak sentiment.
The Guardian reported that it has hired property advisers to discuss options for its 106 stores with a property source telling the newspaper that the company is “going about this in the right way but if they don’t get the rent reductions they will probably pursue a CVA.”
The company reported a loss of more than £3 million in the latest year for which it has filed accounts (the 53 weeks to the end of last June). At the time it complained of “insurmountable government-led cost burdens,” despite its sales edging up to £110 million. Those burdens included rising store costs (both rents and business rates) and the slump of the pound due to Brexit that has raised sourcing costs.
CVAs, or company voluntary arrangements, have been widely used by UK retailers seeking to reduce their property burdens but they’ve become extremely unpopular in the property sector with landlords facing major investment losses.
The company didn’t share any information about its plans but told the Guardian that “in the current retail climate we are constantly striving to secure the most cost-effective and responsible ways of working. This includes working with a property agent on our existing portfolio as well as new sites that we hope to secure in the near future.”
An analyst also suggested to the newspaper that Ann Summers could be facing an almost-unique situation with higher-than-average rents because of the image it had in the past.
“Ten years ago landlords were negative about having Ann Summers in their scheme as it was seen as a glorified sex shop and they always drove a hard bargain on rents,” said Jonathan De Mello, head of retail consultancy at Harper Dennis Hobbs.
But its conversion to a more lingerie-focused company, at least in its stores, has brought issues, despite making the stores more acceptable to high streets, malls and retail parks. “The market has changed and it has become an increasingly desirable tenant,” De Mello added. “The problem for them is that within its ranges, sex toys are the more profitable products and they are increasingly being bought online.”
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