Just had this email through at work and just wanted to flag in case this would affect anyone... hopefully not but always better to be prepared x
Speciality Retail Group proposes CVA to stave off collapse
Speciality Retail Group (SRG), which operates retail brands such as Suits You, Young’s Hire and Racing Green, has proposed a Company Voluntary Agreement (CVA) as a last ditch attempt to save the business by dramatically reducing costs.
SRG is proposing that it pay 60% of its normal rent levels on 42 of its 71 stores for a period of 18 months – although such a move would require a minimum of 75% of its landlords to agree in order to proceed. The group is owned by Egyptian textiles supplier Arafa Holding, which is understood to be likely to withdraw its support if the CVA is not accepted.
SRG boss Peter Lucas stated: "Unfortunately, despite undertaking a thorough operational restructuring of the business in the past year, we have been forced to take more radical steps.
"The combination of refocusing the business on to designers outlets, with a revitalised trading stance, and operational restructuring measures to improve margins and reduce operating costs will make a reorganised Suits You a profitable concern."
If the CVA proposal is accepted there is no immediate threat to jobs within the group as no short-term store closures are planned.
Commenting on the announcement, Richard Fleming, UK head of restructuring at KPMG, and proposed 'supervisor' of the CVA, said: "SRG is a successful brand in its designer outlet stores but has been unable to stave off the drop off in consumer demand in its high street stores. While the company has taken significant steps to address its problems, the business faces administration unless it can restructure its operations via a CVA.
"Unlike the JJB and Blacks CVAs where loss-making stores were closed and landlords of these stores were offered 6 months rent plus rates, SRG is not proposing to close any of its stores immediately. Landlords of the 42 loss-making stores will be offered 60% of the full rent for a period of 18 months. The stores will continue to trade during this period. If, however, the landlords wish to take on new tenants, they can do so by giving 45 days notice. We believe this offers the landlords more flexibility and, indeed, is more generous than previous proposals as the reduced rent over 18 months equates to 11 months rent. SRG will continue to pay rates in full."
KPMG will be holding a series of meetings with landlords this month ahead of a formal creditors meeting on 23rd February at which the 75% CVA consent will be sought.
