New Look has announced plans to slash 60 per cent of its rent bills while offloading loss-making stores as it struggles to stay afloat.
Earlier this week it was revealed that the retailer’s finance director Richard Collyer wrote to landlords to seek meetings to discuss possible store closures and rent reductions.
This has now been confirmed, and the embattled retailer is understood to be seeking a company voluntary agreement (CVA) which could enable it to shutter underperforming stores and negotiate rent reductions on the remaining stores.
READ MORE: New Look tipped to close up to 60 stores
According to proposals seen by Retail Week, New Look’s plan will involve reducing rent at 20 per cent, 40 per cent and 60 per cent depending on their respective performance, with only the best 150 of the retailer’s 600 stores remaining unaffected.
It is also understood to have reserved the right to close 70 of its poorest performing stores.
The CVA will require approval from a majority of New Look’s bondholders before being approved.
“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,” a spokesman said.
“No final decision has been made regarding a CVA, which would require consent from our creditors.”
In the 39 weeks to December 23, New Look reported an underlying operating loss of £5.1 million alongside a loss before tax of £123.5 million.
This was compounded by a 10.7 per cent drop in sales in the UK.