Oroton seeks rent concessions, prepared to close stores
Australia’s Oroton is the latest among a raft of retailers internationally to be seeking rent reductions but the chain, which is still operating in administration, has already closed two stores after its landlords wouldn’t ease its lease terms.
The luxury accessories company, which is currently the subject of a bid from existing minority shareholder Will Vicars, is believed to be looking for rent cuts of up to 40% in order to avoid large numbers of store closures.
The Australian newspaper reported that the Oroton stores in Sydney’s popular Pitt Street Mall and Macarthur Central in Brisbane closed on Sunday.
Oroton went into voluntary administration last month after failing to find a buyer and Vicars, who had an 18% stake in the firm, has been named as the preferred bidder for its assets. It’s not known what terms he has offered to rescue the chain but the details will become public over the next few weeks.
It’s Vicars who has contacted Oroton’s landlords saying that for the business to be viable, rent cuts are a necessity and that he would walk away from sites if the cuts aren’t forthcoming.
The terms of the administration filing would actually allow the company to exit stores quite easily with landlords facing the costs, according to reports.
Vicars is giving landlords only a short deadline to respond as the business needs to buy new-season inventory by the end of this month.
It’s unclear how much of the chain would survive if large numbers of landlords refuse to budge as no other bidders are waiting in the wings so major closures would be on the cards.
Retail landlords in Australia are trying to push through rent increases averaging around 5% but are facing major problems getting the prices they want as the fashion retail sector falters and businesses are closing stores rather than opening or expanding them. Specialty Fashion Group has also said it will close a raft of stores - around 300 out of its 1,000 total.
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