New Look could opt for pre-pack over rent talks, but says it wants "consensual" deal
Jun 29, 2020
New Look is reportedly telling landlords that a pre-pack administration could be the result if they continue to block its attempts to negotiate turnover-based rents.
Such a move could allow the existing owners to retain control of the firm but could also mean the retailer was able to exit onerous leases and negotiate new deals.
Retail Week said on Monday that “multiple sources” have told it that CBRE is handling negotiations for the firm and that a pre-pack plan has been suggested if it doesn’t get what it needs from the talks.
Meanwhile, a New Look spokesperson told Fashionnetwork.com: “We are committed to seeking a consensual agreement with landlords to move to turnover rents, and to work in partnership with them as we continue to navigate these incredibly challenging and uncertain times together.”
Many UK retailers are locked into rent deals that may have reflected boom times a few years ago but that are unsuitable in the post-Brexit, post-Covid, online-focused environment in which they find themselves.
Those rent deals often feature upwards-only reviews, based on the assumption (that was understandable some years ago) that property values and sales through stores would always be on the rise.
Rent deals linked to turnover mean stores selling more would see higher rents while those with lower footfall and sales would pay less. Such deals are the focus of many retailers’ landlord negotiations now.
Opinions are divided over whether the pre-pack option would actually happen or whether it’s a way of concentrating landlords’ minds during what are likely to be tense talks.
Yet it remains a valid option for the company and we’ve already recently seen Monsoon Accessorize and Go Outdoors going into administration then being bought by their previous owners as a way to deal with their store rent problems.
New Look currently employs around 12,000 people in the UK and Ireland and is believed to have withheld rents for the March and June quarters.
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