Monsoon Accessorize pursue CVA

24/04/2019

Fashion retail chain Monsoon Accessorize is looking to enter into a company voluntary arrangement (CVA) to stay afloat, with accountancy group Deloitte hired to help secure the arrangement. “Dozens” of the chain’s 270 stores across the UK are expected to close if the procedure goes ahead, with rent reductions likely to be sought from landlords at other sites.

A spokesman for the company confirmed that executives were “looking at options to accelerate” planned store closures, adding: “The UK retail trading environment is tough and we are continuing to look at options to reduce our overall costs as we restructure the business in the UK and internationally. We have made no secret of the fact that we have steadily reduced our store portfolio in recent years and shall continue to do so as leases expire.”

High street retailers continue to struggle

The company – which operates both the Monsoon and Accessorize chains – is the latest of many high street retailers to pursue a CVA. The insolvency procedure has been used by numerous retailers and restaurant chains in recent months, as conditions for UK high street businesses remain difficult. Rising rent, business rates and wage costs, coupled with waning consumer confidence and significant disruption from the growing online retail market, have left physical retail businesses struggling to remain afloat.

Amongst others, retailers New Look, Debenhams and Mothercare, and restaurant chains Giraffe and Byron, have entered into CVAs recently, with the scheme helping businesses to stay operational by cutting rent costs at remaining sites and closing less profitable stores all together.

CVAs slammed as “bad practice”

However CVAs have attracted criticism for unfairly placing the burden of failed businesses on landlords. Speaking on the procedure’s rising popularity, Melanie Leech, chief executive of the British Property Federation, warned: “For some retailers, CVAs have become a tool to simply enable a tenant to walk away from its lease liabilities without tackling its wider issues. This bad practice is unfair and it must stop.”

Reacting to the news of Monsoon Accessorize’s CVA plans, affected landlords have criticised the chain’s owner Drillgreat for not investing more funds back into the business. Speaking to reporters, one shopping centre landlord called the plan “absolutely extraordinary,” urging: “There has to be some responsibility taken by some businesses that it’s not just about high rents. It’s about the fact that they have failed to take account of the monumental global changes in retail and have failed to invest in the business and in their staff.”

See my article on what CVAs are.

Are you also at risk of collapsing?

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About CPA

The Credit Protection Association can help!

Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.

At the Credit Protection Association, we provide first class commercial credit information that can help you avoid being over extended to commercial customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your business customers.

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