Struggling brand becomes the latest to walk away from lease obligations
Mothercare has become the latest retailer to launch a CVA, aiming to close 50 of its 137 stores. In addition the company will be looking for rent reductions on another 21 stores.
Clive Whiley, the company’s interim executive chairman, said:”The recent financial performance of the business, impacted in particular by a large number of legacy loss-making stores within the UK estate, has resulted in an unsustainable situation for the Mothercare brand, meaning the group was in clear need of an appropriate resolution.
The process to implement the CVA Proposals is expected to complete in July 2018 with the CVA creditor meetings expected to be held on 1 June 2018.
However, it is by no menas certain landlords will accept the proposal and Revo president Mark Williams said: “Once again this morning we’ve woken to the news of a CVA on the high street. There are many underlying reasons for the recent spate of store closures that have been announced and the retail sector is a complex one, but what is entirely clear is that the cost of doing business on the high street is a massive burden that has to be addressed. The main cost is now property tax, ahead of rent for many occupiers. Worse, internet retailers do not contribute to the tax, but they’re reaping the benefits. The government has to step up to the plate here and take urgent action on rates, review how it treats online retailers and an examination of the fairness and use of CVAs.”