Carpetright (CPR) share price falls on news it will close 92 stores with 300 jobs to go as part of a CVA
Carpetright shares sunk more than 16 per cent in morning trading after it announced the details of its planned company voluntary arrangement (CVA) to tackle its “legacy property issues”, and deliver a turnaround in fortunes.
It has identified 92 sites of 205 underperforming ones for closure, with 113 being subject to a reduction in rental costs and revised lease terms. Some 300 jobs are at risk as a result.
The retailer’s boss Wilf Walsh said they were “tough but necessary actions” as the firm struggled with too many poorly located stores on unsustainable rents.
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Carpetright’s chief executive said:
These tough but necessary actions will enable us to address the burden of a legacy UK property estate consisting of too many poorly located stores on unsustainable rents and are essential if we are to restore our profitability and deliver a successful turnaround. Carpetright has engaged fully with the British Property Federation on the detail of the CVA Proposal and we thank them for their constructive approach.
Completion of the CVA and equity financing will enable us to establish an appropriately-sized estate of modernised stores, on economic rents, complemented with a compelling online offer, enabling Carpetright to address the competitive threat from a position of strength.
We will remain in close contact with all colleagues to keep them fully informed as we move through this process.
It will seek creditor approval of the CVA at a meeting on the 26 April, and from shareholders on 30 April.
As well as the CVA, Carpetright expects to raise around £60m through an equity capital raising, expected to be by way of a placing and open offer.
It said this will go towards funding the group’s on-going strategy, reduce indebtedness and cover the costs associated with the CVA.
Carpetright has more than 400 stores in the UK, and has outlets in the Netherlands, Belgium and Ireland.
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