Carpetright closes 92 stores to stave off administration
Staff Writer |
Flooring retailer Carpetright announced plans to close at least 92 stores and raise approximately £60m to restructure the business and avoid going into administration.
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The company, which has seen its shares fall 81% since the start of the year as it issued a series of profit warnings, said it would implement a company voluntary arrangement (CVA) to free itself of its poorly-located sites. The CVA will only cover landlords and no other creditors.
Trading conditions since the last announcement on 1 March have remained difficult but in line with previous guidance, the company said, with management still expecting to report a small underlying pre-tax loss for the year to 28 April.
Out of the total 400 shops across the UK, 205 have been identified as underperforming and/or on poor terms. Of those, it will close 92 and the rest will be subject to a reduction of rental costs and revised lease terms. Approximately 300 redundancies are expected from the move.
The firm said it will seek creditor approval at a meeting on 26 April to allow the outlet closures in a company voluntary arrangement (CVA). It will also have to seek shareholder approval on 30 April.
Carpetright's chief executive Wilf Walsh said on Thursday: "These tough but necessary actions will enable us to address the burden of a legacy UK property estate consisting of too many poorly located stores on unsustainable rents and are essential if we are to restore our profitability and deliver a successful turnaround."
"Completion of the CVA and equity financing will enable us to establish an appropriately-sized estate of modernised stores, on economic rents, complemented with a compelling online offer, enabling Carpetright to address the competitive threat from a position of strength," he added.
In addition the company expects to raise c£60m in equity capital via a placing and open offer to fund the on-going strategy and reduce indebtedness and cover the costs associated with the CVA. The raise is expected to be launched on or around 18 May 2018. ■