New Look wants its landlords to slash store rents by up 60% as part of a rescue plan drawn up by the loss-making retailer to tackle its £1.2bn debt.
The fashion chain is seeking a company voluntary arrangement (CVA), a legal agreement which would enable it to jettison loss-making stores and agree rent reductions with landlords.
Details of the proposals, seen by Retail Week magazine, suggest the retailer has divided its 600 stores into three groups based on performance. Under the plan, New Look would switch to paying landlords 40% of the rent due on its 70 worst performing outlets and reserve the right to close them.
It is also asking the owners of another 380 stores to agree to cuts of between 20% and 60% for three years. Only the chain’s top 150 stores would be unaffected by the process.
New Look, which is backed by private equity, must first secure the approval of its bondholders before it is able to pursue a CVA.
“The company has previously indicated that a potential CVA is being considered as part of a range of options to improve the operational performance of the business,” said a New Look spokeswoman. “No final decision has been made regarding a CVA, which would require consent from our creditors.”
