Poundworld and Carpetright Plan Closures - CPA | The Credit Protection Association

Poundworld* and Carpetright Plan Closures

27th April 2018.

Hundreds of jobs are under threat on the British high street as Carpetright embarks on a sweeping overhaul and Poundworld lays the groundwork for store closures.

The retail apocalypse has taken another victim, or in this case; two. Carpetright, the flooring retailer has put 300 jobs at risk as it announces plans to close 81 stores as part of a Company Voluntary Arrangement (CVA). This arrangement with its creditors will allow the company to close loss-making stores and secure discounted rent. Overall 92 branches are poised for closure, while 11 have already stopped trading. While there will be attempts to redistribute redundant workers across the business, this will still leave many employees out of pocket.

At the same time, budget retailer, Poundworld, has also run into trouble. The retail chain is also considering a CVA which could put its branches and employees at risk. This is all in response to the brutal conditions that are marring the high street, with skyrocketing business rates chipping away at business confidence. The recent bout of bad weather also hit the sector hard, with deliveries and turnout heavily affected by the snow.

Retailers have struggled to gauge the interest of a more penny-pinching consumer, watching as borrowers become staunch savers. As inflationary pressure eases in the first quarter of the year, and the squeeze on households relaxes, consumers could become more interested in non-essential purchases. While business owners should free up their cash flow to prepare for the very best-case sceanrio, they should also protect their cash for the worst. In an effort to brace for any new economic downturns, owners should ensure they have enough financial cushion to fall down on. At the Credit Protection Association, our debt recovery services and credit management services provide the financial aid to enhance the business, while our credit checks will secure its permanent place on the high street.

Hikes to the National Living wage, persistently high inflation and rising taxes sparked by last year’s business rates revaluation have squeezed margins.

Carpetright chief executive Wilf Walsh said: “Receipt of creditor approval for our CVA proposal will enable us to take tough but necessary action to establish a right-sized estate of stores on economic rents, which is essential to restoring our profitability.”

House of Fraser revealed last week that a CVA was among the options it was considering, while fashion chain New Look has already made swingeing cuts through the restructuring process.

It seems that the economy will not recover quickly. While recent transition agreements with Brussels have slowly lifted the country’s political uncertainty, UK businesses are not exactly springing back. Confidence in investment has been shaken and businesses are more willing to file a CVA than to commit their cash to an expansion project. There should be a healthy harmony between focussing on your business’ growth and ensuring the right foundations are in place to keep it from being uprooted.

At the Credit Protection Association, we are both a debt recovery and credit management company. This means we chase down late payers and unpaid invoices to free up our members’ cash flow, while also conducting thorough credit checks and utilising company directories to ensure our members know everything about who they do business with.

If we are to protect our competitive edge going into Brexit, our businesses need to stay alive. Approaching a third-party like the team at CPA could help achieve this.

Not only does our team free up cash flow and spring clean finances, we also have a special scheme using a little-used legislation that helps business owners realise a hidden source of cash and unlock hidden potential within their business.

*CPA much regrets that we incorrectly wrote “Poundland” rather than Poundworld in the original title of this article, for which we sincerely apologise, particularly to the CEOs, employees and customers of Poundland.

The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!