Excessive avenue vogue retailer New Look has taken the bizarre step of asking landlords to change 402 of its shops to a turnover-based lease as a part of a restructuring to outride the Covid-related downturn.
Rents primarily based on gross sales have been utilized by different vogue retailers however this would be the first time a retailer property of this dimension has been switched to turnover rents within the UK. It’s in search of to pay zero lease for 3 years on 68 shops.
“Now we have been in discussions with our landlords relating to a required transfer to turnover-based rents since Might,” stated New Look chief govt Nigel Oddy. “The proposal now we have launched at present would relieve the monetary stress on New Look as we navigate the post-Covid panorama, while additionally offering our landlords with larger flexibility over their rental preparations and guaranteeing nearer alignment of pursuits.”
The share of turnover paid as lease varies as much as a most of 12 per cent, the corporate stated. It added that following suggestions from landlords, it will settle service cost arrears and supply property house owners the fitting to interrupt the lease at any level over the following three years in the event that they recognized an alternate tenant.
New Look itself shouldn’t be trying to shut any shops because of the corporate voluntary settlement. It did shut greater than 60 shops, with landlords taking again one other 20 or so, beneath a earlier CVA launched in 2018.
Collectors will vote on the proposals on September 15, with three-quarters required to be in favour. With out the CVA, the debt-for-equity refinancing that New Look introduced two weeks in the past won’t proceed and the corporate will almost definitely fall to into administration, placing greater than 11,000 jobs in danger.
New Look stated the refinancing — additionally the second such train in recent times — had obtained the requisite stage of help from financial institution lenders and holders of its bonds, which stand to incur substantial losses consequently.