Tue, 30 Jun 2020 | ADMINISTRATION
Fashion retailer New Look has warned landlords that it may launch a pre-pack administration if its attempts to move to turnover-based rents continue to be blocked. The business has hired CBRE as it looks to move its 500 stores to turnover-based rents, but it is reportedly increasingly worried that landlords will continue to block its attempts.
New Look has now reportedly said to landlords that, if negotiations are unsuccessful, it might have to launch a pre-pack administration. While it is reported that both sides still hope for a consensual agreement, a pre-pack administration would allow owners to retain control of the business, while also allowing the retailer to exit leases and negotiate new terms.
A spokesperson for the company said: We are committed to seeking a consensual agreement with landlords to move to turnover rents, and to work in partnership with them as we continue to navigate these incredibly challenging and uncertain times together.”
New Look, which employs around 12,000 staff in the UK and Ireland, has reportedly withheld rents for the March and June quarters, but is said to have recommenced turnover-based rent payment for stores that are open and trading.
A pre-pack administration would represent New Look’s second financial restructuring in under two years, following a debt-for-equity swap with stakeholders that it undertook in January 2019.
The company’s most recent accounts were filed to the year ending March 30 2019. Its total revenue declined 3.9 per cent, from £1.2 billion in 2018, to £1.17 billion in 2019. However, its underlying operating profit increased to £30.8 million, up from a £45.3 million loss in 2018.
New Look also reported that, following a successful e-commerce strategy and cost savings deriving from its turnaround plan, its adjusted EBITDA increased from £6.9 million in 2018 to £76.9 million in 2019.
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