WH Smith seeks rent cuts

WH Smith is reportedly seeking rent cuts from its landlords as it looks to cut costs.

According to The Sunday Times, the retailer has drafted in advisers Gerald Eve to negotiate with landlords across its portfolio of over 1,000 UK stores located on the high street and at travel hubs. 

The paper also reported that the move has angered some landlords with an unnamed source claiming it was using the threat of a potential CVA to encourage an agreement in terms. 

However, a source from WH Smith reportedly told the times that a potential CVA was not being pursued or was being used as a threat to landlords, although they did decline to rule one out. 

The news comes a week after WH Smith revealed it had launched a collective consultation that could see around 1,500 roles across the business axed in a bid to restructure the business.

The group also said it expects to deliver a full-year loss of between £70m and £75m following impacted sales. 

The retailer said that the “difficult decision” to review its operations and restructure the business was a result of lower footfall and passenger numbers across UK high streets in the wake of the pandemic. 

Having previously predicted that total revenue would be down between 80% and 85% from April until the end of its financial year on 31 August 2020, it notes that sales have made a “gradual recovery”, but remain materially down against the year prior.

As of July 2020, total group revenue declined by 57%, while high street revenue was also down by 25%. 

A spokesperson for the retailer said: “Like all retailers, WH Smith has been impacted by Covid-19, and while we have reopened all our 575 High Street stores, footfall remains depressed and it is imperative that our property costs reflect the significant changes on the high street. We are working collaboratively with the vast majority of our landlords and look forward to agreeing terms which are appropriate for today’s retail environment.”