New Look’s stores are being snapped up by rival retailers as its landlords opt to find new tenants instead of accept rent reductions amid its CVA.
According to Drapers, two stores on Commercial Road in Portsmouth and Launceston in Cornwall, which were set to continue trading with reduced rents, will now be taken by JD Sports and Iceland respectively.
Other retailers including Sports Direct, Lidl and Mountain Warehouse are also reportedly eyeing up New Look’s portfolio.
In March, the fashion retailer saw its CVA given the greenlight by shareholders, including landlords, which is set to see 60 stores close and rents reduced on 393 of the remaining 533 stores.
Under the terms of a CVA, landlords are hit with rent reductions of up to 60 per cent but they retain the right to break leases if 60 days notice is given under.
One property expert told Drapers that New Look’s landlords were looking to mitigate the losses incurred by the CVA by bringing in new tenants, adding: “A lot of landlords are saying now saying ’I think I can do better or the same’ and this I think this has caught New Look by surprise.”
This comes amid increasing resistance from landlords over the growing number of retailers entering into CVA.
Last month landlords considered undertaking legal action against House of Fraser over their handling of the CVA, while many other have spoken out against the process saying that it is unfair on landlords who largely have to foot the bill for failing retailers.