Moss Bros to launch CVA as it seeks to cut rent costs
Crisis-hit Moss Bros has launched a CVA proposal as it works towards restructuring its fixed cost base on the back of the Covid crisis and a second wave of lockdowns that have “severely impacted” its trading.
It’s perhaps no surprise given that the formal clothing in which Moss Bros specialises has been one of the worst hit categories this year. Sales of men's suits have fallen as consumers have stayed away from offices and as formal occasions, from weddings to other social events, have been cancelled.
Moss Bros was never going to prosper in a retail environment in which loungewear has been the top growth category, and that meant its 128 stores and around 800 staff found visitor traffic slowing to a trickle even when shops were allowed to open.
As its comment about restructuring its fixed cost base suggests, the big target of its CVA proposal is to get rent reductions on those shops to help secure its future. But there are no details available as yet as to whether the company is aiming to shut any of its shops and what impact this would have on jobs.
The company has been negotiating with its landlords since it hired KPMG as advisors in September. But the CVA move appears to have come on the back of the failure of those landlord discussions as its proposal to switch to turnover-based rents was rebuffed by a property sector that's under heavy pressure itself.
The formerly-stock-exchange-listed company was this year acquired and taken private by Brigadier Acquisition Company (an investor group led by Crew Clothing owner Menoshi Shina) for just under £23 million. Brigadier had actually tried to get out of the deal due to the firm’s declining fortunes, despite having agreed to buy the company after the coronavirus had already been declared a pandemic and as the UK prepared to embark on its first lockdown. But it was forced to go through with the takeover under stock exchange rules.
CEO Brian Brick said of the latest news: “Prior to the Covid-19 pandemic the group was trading robustly versus last year, despite operating in a challenging business environment. At the outset of the pandemic, we managed to reduce costs and furlough staff in order to survive the first lockdown.
“There was then a glimmer of hope as we began to reopen some stores in the summer period, but even then trading was severely impacted, footfall was extremely low and sales were substantially down on the previous year. With the introduction of further lockdown measures, and with the outlook for trading remaining depressed, the group now faces no alternative but to try and limit our fixed costs and we have therefore made the tough but essential decision to undertake a CVA in order to protect the future of our business and people.”
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