Clothing retailer Allsaints has revealed the launch of a CVA proposal that aims to restructure both its UK and US store portfolio and move to a turnover-based rent structure due to the impact of the coronavirus pandemic.
Allsaints said the move comes despite year-on-year revenue growth for five successive years. However, the closure of the “vast majority” of the group’s retail estate around the world as a result of the pandemic has inevitably had a “substantial and sudden” impact on its short-term sales.
Although AllSaints took “immediate actions” to mitigate the impact and reduce costs it said a “compromise” with the Group’s creditors, via the CVAs, is therefore now required to ensure the viability of AllSaints’ business.
As such, Allsaints is putting forward a proposal to its landlords that will see most of its 41 stores in the UK and 42 stores in North America move to turnover-rent. It also said a small number of stores will close where “business is not feasible”.
Allsaints said the move will enable the group to “sustain a strong physical retail presence”, which in turn will allow it to protect jobs and continue to serve its customers.
Creditors will vote on the proposal at meetings on 3 July 2020 in the US and 6 July 2020 in the UK.
Peter Wood, CEO of Allsaints, said: “We have taken this step in order to ensure the long-term viability of AllSaints in the face of the unprecedented impact that COVID-19 has had on our business and the wider fashion retail industry.
“The CVAs will allow us to sustain a strong physical retail presence, which in turn will allow us to protect jobs and continue to provide great product and service to our customers.”
He added: “Prior to the outbreak of the pandemic we were seeing increased demand for AllSaints in every part of the world in which we operate, and during lockdown we have continued to reach new customers via our online channels.
“The commitment of our global team and the support of our vendors has been fantastic throughout this exceptionally challenging period. As a result, despite the sudden and adverse impact that COVID-19 has had on our sales and our short-term outlook, we remain confident in the long-term prospects for our brand.”