CVA will slash shoe manufacturer’s stores portfolio and axe hundreds of jobs

A Skelmersdale shoe manufacturer plans to launch a CVA (Company Voluntary Arrangement) which would see it close 65 of its 80-strong store portfolio.

And Hotter Shoes has started a formal consultation process with staff at its head office which could lead to “a number of redundancies”, it said.

A CVA is an agreement with a company’s creditors which would allow a proportion of its debts to be paid back over time.

The business, which is owned by private equity firm Electra, was working on a restructuring programme to shift focus to a direct marketing model, but said it has been forced to bring it forward much quicker by the coronavirus pandemic.

Hotter said it had been negotiating with a number of its retail landlords over its restructuring plans “to reduce the number of stores to a level and cost that allows Hotter to remain viable”.

But it said individual discussions have been unsuccessful in obtaining the required level of agreement to allow the retailer to continue, and it will launch a CVA in the next few days.

It said if creditors agree to the CVA terms, it will leave a trading estate of 15 shops.

Electra chairman, Neil Johnson, said: “Before the pandemic hit, Hotter, under new chief executive Ian Watson, was making good progress to accelerate the implementation of a digitisation strategy to return it to its direct marketing routes.

“The need for these actions has been intensified by the consequences of the past three months of lockdown.

“If successful, the proposed CVA will result in fewer stores, which will secure the future of a smaller, sustainable business and will save over 350 jobs.”

He added: “I would like to thank all our colleagues at Hotter for their continued understanding at this difficult time.”

Hotter specialises in women’s and men’s shoes that are aimed at the older market.

The firm was founded in 1959 as a slipper manufacturer.

It now offers a collection of stylish women’s and men’s shoes with hidden features including super soft and breathable leathers, lightweight and flexible soles and underfoot cushioning.

The company is understood to employ around 1,200 people and has in excess of three million customers.

Its multi-channel sales platforms enable customers to shop online and through mail-order catalogues in the UK and US, at stores across the UK and in Europe.

Its state-of-the-art factory produces a pair of hand-finished shoes every 20 seconds which, according to the British Footwear Association, makes it the UK’s largest shoe manufacturer.