In a move that puts the future of some of its 35 North West stores in doubt, retailer Carpetright has announced it will close 92 locations around the UK with around 400 jobs at risk.
In a company voluntary arrangement announced today, the Purfleet-headquartered retailer said it had identified 205 sites in the UK that were either underperforming or on unfavourable lease terms.
It plans to shut 92 of these in the short term, while the remaining 113 sites will be subject to a reduction in rental costs and revised lease terms. The number of store closures also includes 11 stores that are not currently trading.
The remaining 82 stores are likely to close on or after 23 September this year.
Carpetright operates 35 stores across the region, from Carlisle to Crewe. It has sites in towns including Altrincham, Bolton, Chorley, Kendal, Penrith, St Helens, Stockport, Wallasey, and Wigan.
The company said trading conditions “remained difficult” and it expects to post a pre-tax loss in its upcoming full-year results, covering the year to 28 April 2018.
Carpetright will seek creditor approval of the CVA on 26 April, while the proposals will go to shareholders for sign-off on 30 April.
It added it would look to raise £60m through an equity capital raising, likely through a share placing, and would use the proceeds to reduce debt and cover the costs associated with the CVA. This is expected to launch on or around 18 May.
Carpetright will also need interim funding of £15m to ensure it has enough working capital before the placing completes, and said it was “in discussions with a key stakeholder” to secure this funding.
Carpetright chief executive Wilf Walsh said: “These tough but necessary actions will enable us to address the burden of a legacy UK property estate consisting of too many poorly located stores on unsustainable rents and are essential if we are to restore our profitability and deliver a successful turnaround.
“Carpetright has engaged fully with the British Property Federation on the detail of the CVA proposal and we thank them for their constructive approach.
“Completion of the CVA and equity financing will enable us to establish an appropriately-sized estate of modernised stores, on economic rents, complemented with a compelling online offer, enabling Carpetright to address the competitive threat from a position of strength.
“We will remain in close contact with all colleagues to keep them fully informed as we move through this process.”
The company is being advised by Deloitte on its CVA.