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Office Outlet announces CVA proposal

Stationery retailer Office Outlet has announced a company voluntary arrangement (CVA) proposal to restructure its UK store estate as part of its ongoing turnaround strategy.

The retail chain formerly known as Staples has spent the last two years performing an operational restructuring which it said has “significantly improved” its store performance.

The company added that due to the “significant decline in footfall” at out of town retail parks, a proposal to restructure the fixed costs was required to lead to long term profitability.

This follows the completion of a management buyout of the company by the current management team, Chris Yates and Mark Logan.

Under the terms of the CVA, Office Outlet is seeking to exit four stores in late 2018. The store closures will result in approximately 44 job losses, but the company said “every effort” will be made to redeploy staff from the closure stores.

The other 95 stores, including the online business, will continue to trade as normal. It was also reported that the chain may be seeking a three-year rent-free period for some of its stores, and a reduction in rent for the others.

Daniel Butters and Robert Harding of Deloitte, the business advisory firm, have been appointed as nominees to the CVA and the CVA meeting will be held on 6 September.

Chris Yates, CEO of Office Outlet, said: “Given the challenging UK retail environment and our over-spaced and over-rented UK store estate, we are having to take tough but necessary actions to reduce our fixed cost base and restore long-term profitability.

“We have held constructive discussions with our key landlords and strategic partners and will now seek creditor approval on our CVA proposal. This will provide greater security for our staff, suppliers, landlords, customers and members. This is a successful brand and we are confident the company will emerge in excellent shape from this process.”

Daniel Butters, partner at Deloitte, added: “The retail trading environment in the UK remains extremely challenging, driven by weaker consumer confidence, the implications of Brexit and competition from online channels. The CVA will provide a stable platform upon which management’s turnaround plan can be delivered.

“We have fully engaged with the British Property Federation and its members and their views are reflected in what we believe is a fair proposal to restructure the property obligations of the company. It is important to stress that no stores will close immediately and employees and suppliers will continue to be paid on time and in full.”

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