Clarks 'to shut dozens of stores' in CVA rescue deal - report
Footwear giant Clarks is reportedly planning a company voluntary arrangement as it seeks to close under-performing stores in order to clinch a rescue deal.
The company, which had earlier said some of its stores were a major drain on the business, is believed to be planning dozens of store closures via a CVA as a condition of Hong Kong-based LionRock Capital pumping new investment into the firm. Sky News reported that creditor approval for the CVA is a condition of the LionRock deal.
It’s unclear how many shops might close but the report suggested that as many as 50 could be at risk, which potentially means hundreds of job losses. It also said that the company’s aim for other stores is to switch them to turnover-based rents, just as New Look did very recently.
So what would Clarks get in return? There’s been talk of more than £100 million of new money, although this would mean the founding family losing control of the company for the first time in almost 200 years.
The prospects of a CVA come after the pandemic has devastated UK high street sales and also as footwear has suffered in particular. Consumers appear to have seen little need to replace shoes that haven’t worn out during lockdown and while working from home.
But Clarks’ fundamental problems pre-dated the pandemic. Far from this year being an isolated challenge to overcome, it seems to have turned into the last straw, at least as far as its 345-strong store estate is concerned.
The company hasn’t commented on the CVA report.
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