Hotel Chocolat boss calls for rent cuts to stop ‘subsiding’ CVAs
Angus Thirlwell wants landlords to offer his business similar rent cuts to those given to struggling rivals, to ensure ‘fairness’.
Hotel Chocolat is asking landlords for clauses in rent renegotiations that match any rent cuts pushed through by rivals via a popular form of insolvency.
Company Voluntary Arrangements (CVAs), where a retailer asks landlords for a rent cut to avoid going bust, has been a popular route out of difficulties for struggling high street chains.
But Hotel Chocolat’s co-founder and chief executive Angus Thirlwell told the PA news agency he was fed up with getting “penalised for being successful” by subsiding rent cuts for others, and called for “fairness” from landlords.
He said: “We didn’t think it was right that this was happening – businesses shouldn’t be penalised for being successful. We are growing and want to continue opening in new locations but in a long-term sustainable, careful and measured way.”
The retailer, which has 127 stores across the country, has managed to hold up well in tough high street conditions, banking a £14.1 million pretax profit in the year to June 30, up 11% with sales rising 14% to £132.5 million.
But in renegotiations with landlords over rents, the company has started calling for clauses that say if a near-neighbour store goes through a CVA process and enjoys a cut in rent, Hotel Chocolat should too.
The tactic was first raised by Next in 2018 when chief executive Simon Wolfson explained he had started asking for so-called “CVA clauses” in negotiations.
Retailers and landlords have been through heated battles in recent years, with CVAs staving off some store closures, but leaving some critics to question whether some companies are using it as an easy tool to wipe off some debt – rather than because they would immediately go bust without it.
Most recently, British Land launched a legal challenge to a CVA by Monsoon Accessorize over concerns that the company’s owner had not invested enough cash into saving the business.
Other big names to use CVAs include New Look, Debenhams, Arcadia and Mothercare – although the latter failed to recover and went bust in November.
CVAs require approval from 75% of creditors – consisting mainly of landlords with years of future rent owed – and some have pushed back calling for greater safeguards.
Some landlords, including Intu, have started retreating by selling off shopping centres and paying down debts.
Hotel Chocolat added it will be focusing its attentions on new stores in train stations, airports and other sites that operate a turnover rents system – where an agreed percentage of a store’s takings is handed over in lieu of rent.