AllSaints launches CVA proposal for UK & US stores

AllSaints launches CVAs for UK and US stores
AllSaints said a "small number" of stores will close where business is not feasible - although an exact figure was not provided.
// AllSaints launches CVA proposal for its UK and US stores
// If approved by creditors in July, the move would affect 41 stores in the UK & 42 stores in North America
// AllSaints says there will be a “small number” of store closures while remaining stores will move to turnover rent

AllSaints has announced the launch of a CVA proposal that aims to see a major restructure of its store portfolio in the UK and the US.

The fashion retailer is putting forward a proposal to its landlords that will see most of its 41 stores in the UK and 42 stores in North America move to turnover-rent.

Meanwhile, while a “small number” of stores will close where business is not feasible – although an exact figure was not provided.

READ MORE: AllSaints lurches towards CVA

AllSaints said the CVA proposal would “effectively” align landlords with the business recovery and will protect the retailer from further risk of store closures.

Alvarez & Marsal managing directors Richard Fleming and Mark Firmin have been drafted in to lead the CVA process for the fashion retailer’s UK-based All Saints Retail Limited and its US subsidiary AllSaints USA Limited (ASUSA).

Creditors will vote on the proposal at meetings scheduled for July 3 in the US and July 6 in the UK.

AllSaints’ leases on its stores in the US and Canada are held in its AllSaints USA subsidiary.

As the subsidiary is a UK registered and managed company, it is able to participate in the CVA process.

In total, AllSaints trades from 255 stores in 26 countries and employs more than 3000 people.

“Applications to the US and Canadian courts have been made simultaneously with the launch of the ASUSA CVA, in order for the CVA to be recognised in both jurisdictions,” the retailer said in a statement.

“If and when creditors approve the ASUSA CVA, follow-up recognition submissions will be made to both courts.

“As a result, while landlords in North America may be less familiar with the CVA process than landlords in the UK, they will be able to benefit from a successfully implemented CVA under both UK and US/Canadian law.

“The following parties and creditors will not be compromised or impaired in any way by the CVA in North America: employees, suppliers, general unsecured creditors (other than landlords), secured lenders, tax claims held by any government unit or municipality, and parties to licences and contracts.”

AllSaints said that prior to the outbreak of the Covid-19 pandemic, AllSaints had delivered year-on-year revenue growth for five successive years.

In its most recent financial year ending February 1, it delivered sales growth in every region and across every channel in which it operates.

However, it said the closure of the vast majority of its store estate around the world as a result of lockdowns brought about by the pandemic has had “a substantial and sudden impact” on its short-term sales.

AllSaints added that it took immediate actions to mitigate the impact and reduce costs, like measures to maximise online sales, halting all discretionary spend and using government support where possible.

“While AllSaints is now beginning to re-open its stores around the world, it is doing so in the environment of an ongoing pandemic, with extensive social distancing measures in place, and significant uncertainty around customer appetite to travel and shop in store,” the retailer stated.

“A compromise with the group’s creditors, via the CVAs, is therefore now required to ensure the viability of AllSaints’ business.

“This will enable the group to sustain a strong physical retail presence, which in turn will allow it to protect jobs and continue to serve its customers.”

AllSaints CEO Peter Wood said: “We have taken this step in order to ensure the long-term viability of AllSaints in the face of the unprecedented impact that Covid-19 has had on our business and the wider fashion retail industry.

“The CVAs will allow us to sustain a strong physical retail presence, which in turn will allow us to protect jobs and continue to provide great product and service to our customers.

“Prior to the outbreak of the pandemic we were seeing increased demand for AllSaints in every part of the world in which we operate, and during lockdown we have continued to reach new customers via our online channels.”

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