New Look in landlord talks about turnover-linked rents
Less than two years on from its CVA, New Look is in talks with its landlords again and has appointed two property agents to help it negotiate rent deals based on turnover as it prepares to reopen its store estate this month.
The value fashion retailer has appointed CBRE (with which it worked on its store closures in 2018) and CWM about the switch to a different kind of rent assessment. And there have been reports that the company could even be mulling its second financial restructuring in just over a year.
The firm, which had been reporting improving results before the coronavirus crisis, has been hit hard by the lockdown with around 500 stores in the UK and Ireland shut.
It has begun talking to property owners in the past few days, making it one of several companies trying to negotiate lower rents and link the payments more closely to turnover at specific stores. The firm told Sky News that it’s in “discussions with landlords regarding rental arrangements which fairly reflect the retail operating environment”.
Other major names doing likewise include Frasers Group and Boux Avenue.
New Look has already held on to rent payments that were due in March, requesting a three-month rent holiday. But the three months is almost up and with another bill due soon and the firm having generated little revenue in the intervening period, its situation remains challenging.
Sky reported sources saying that inconclusive talks or lukewarm landlord support could lead to the company mulling alternatives such as an insolvency process.
And it’s still not a certainty that the company will get the landlords to fall in with its plan. They’re already suffering from a radically reduced rent intake and the prospect of sacrificing future rents won’t go down well with them.
The stakes are certainly high for the retailer and its staff. It employs as many as 12,000 people, although there are no suggestions that if the company filed for administration it would face an Oasis/Warehouse-type scenario. Those chains closed completely after going into administration.
New Look is still expected to emerge from this crisis as a large chain with plenty of physical stores, whatever happens. However, some job losses seem likely with stores that were seen as viable six months ago possibly not having a future in the post-pandemic retail sector.
As it stands, the firm is planning to reopen five stores in Ireland next week and 130 UK branches the following week. It’s unclear how fast the rest might open and whether any will stay closed permanently.
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