Carpetright to shut stores and swing the axe on 300 jobs
The retailer has earmarked 81 stores for closure.
Embattled retailer Carpetright has won the backing of creditors and landlords for a restructuring plan that will spark store closures and hundreds of job losses.
Carpetright has earmarked 81 stores for closure as part of a company voluntary arrangement (CVA), which allows firms to shut loss-making outlets and secure rent reductions.
The group won the backing of more than 75% of creditors to push ahead with the plan and a total of 300 staff are now at risk of redundancy, although the firm hopes to place as many as possible in other roles within the group.
Earlier this month the chain said 92 sites were in the firing line, although 11 have already stopped trading, with rent on another 113 set to be slashed as part of the restructure.
Boss Wilf Walsh said: “Addressing our legacy property issues to reduce our fixed costs to sustainable levels is critical to securing Carpetright’s recovery.
Receipt of creditor approval for the 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 Wilf Walsh, Carpetright boss
“Receipt of creditor approval for the 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.”
The retailer has been hit by poor trading and is in “technical breach” of its banking arrangements, but the group said it was taking action to address this and ensure it is amended for the future.
Carpetright has 409 UK shops overall and employs nearly 2,700 staff.
Shareholders in the listed firm will also vote on the CVA on April 30, but the creditor vote will take precedence in the event there is a discrepancy.
When it first announced the CVA, which is being handled by Deloitte, Carpetright said it would help it to “address the competitive threat from a position of strength”.
Carpetright is also attempting to raise around £60 million through a rights issue to put the company on a firmer financial footing.
The group expects to post a small underlying loss for the year to April 28.
The vote comes days after Carpetright’s biggest shareholder, Meditor Capital Management, increased its stake in the business.
Meditor upped its stake in Carpetright from 16.5% to 29.99% on Monday, just shy of the threshold at which it would have to make a formal takeover bid for the retailer.
Meanwhile, another major shareholder, Franklin Templeton, reduced its holding from 16% to 1.7%.
The retail sector has already seen thousands of jobs axed following the collapse of well-known names Toys R Us and Maplin.
High street retailers have been hit by a drop in consumer spending, soaring costs and the increasing threat of online competitors.