Struggling Suits You owner in CVA move
THE group behind the Suits You menswear chain has become the latest retailer to put forward a CVA proposal in an attempt to slash costs and stave off collapse.
Speciality Retail Group (SRG), which also operates the Racing Green and Young’s Hire brands, has proposed a Company Voluntary Arrangement to pay 40% less rent on 42 of its 71 stores for the next 18 months, but it requires 75% landlord support.
The group, which employs 300 people, is run by Yorkshire-based chairman Peter Lucas, the chairman of menswear group BMB, based at Granary Wharf in Leeds.
SRG was acquired by Egyptian textiles supplier Arafa Holding in 2008. Arafa is a major shareholder in BMB.
SRG said that without the CVA, Arafa will “not continue to support the business”.
Mr Lucas said: “Unfortunately, despite undertaking a thorough operational restructuring of the business in the past year, we have been forced to take more radical steps.
“The combination of refocusing the business on to designers outlets, with a revitalised trading stance, and operational restructuring measures to improve margins and reduce operating costs will make a reorganised Suits You a profitable concern.”
CVAs have been increasingly used in the retail sector. In 2009, JJB Sports, Focus DIY and Blacks Leisure all used KPMG to implement CVAs but, unlike these, SRG is not planning to close any stores or make any job losses immediately.
Suits You will use the CVA to rebalance its store portfolio away from the high street to designer outlet parks, where its shops are performing better.
Brian Green, head of restructuring at KPMG, in the North West, is one of the proposed supervisors of the CVA.
He said: “SRG is a successful brand in its designer outlet stores but has been unable to stave off the drop off in consumer demand in its high street stores. While the company has taken significant steps to address its problems, the business faces administration unless it can restructure its operations via a CVA.
“Unlike the JJB and Blacks CVAs where loss-making stores were closed and landlords of these stores were offered six months rent plus rates, SRG is not proposing to close any of its stores immediately.
Mr Green added: “Landlords of the 42 loss-making stores will be offered 60% of the full rent for a period of 18 months. The stores will continue to trade during this period. If, however, the landlords wish to take on new tenants, they can do so by giving 45 days notice.
“We believe this offers the landlords more flexibility and, indeed, is more generous than previous proposals as the reduced rent over 18 months equates to 11 months rent. SRG will continue to pay rates in full.”
