Monsoon in urgent talks on its future, CVA is a possibility
today May 28, 2019
Monsoon Accessorize is fighting for its future as it attempts to strike new, lower, rent deals with its landlords, although it’s unclear whether this would avoid the need for a company voluntary arrangement (CVA) or not.
Monsoon founder Peter Simon has said he will inject £34 million into the business if landlords agree to the rent cuts.
The company is just one of a raft of retailers at present looking to reduce the burden of high rents. Their shops are far less profitable than they used to be as UK consumers shift their fashion spending online and also gravitate towards higher-profile supermalls and retail parks, leaving many high streets in decline.
A source with knowledge of the company's plans told the Telegraph that the business is trying to negotiate lower rents in order to avoid store closures and is hoping to reach deals directly with its landlords rather than using the controversial CVA mechanism. But other newspapers reported that the landlord talks are going on in the context of a CVA filing.
CVAs have become increasingly controversial as they’ve been seen as ways for businesses that had over-ambitious expansion plans to dodge lease obligations, leaving landlords (many of them small companies) high and dry.
However, without CVAs, a large number of chains could disappear completely and under-pressure high streets and malls would struggle to recover from the many empty properties they’d be left with.
In this case, it’s interesting that Peter Simon is also one of Monsoon’s landlords. The Sunday Times reported that he owns the retailer’s head office in London and is considering a rent reduction for that property.
But if the talks with other landlords break down, Monsoon could have little other choice than going down the CVA route with an unspecified number of its 271 stores likely to close.
The prospects of such a move were first talked about this April but it's undeniable that Monsoon has been suffering for several years. Its sales were falling as far back as 2015 and news of planned store closures first emerged in 2016, with little good news since then, despite it getting a revenue boost from its Ship From Store Technology that was deployed last autumn.
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