Ann Summers threatens landlords with CVA process over shop rents

Retailer Ann Summers has warned its stores’ landlords they must take “a more pragmatic approach” to negotiations over rents.

The lingerie and sex toy chain said if this did not happen, it would ask to formally restructure its debts through a Company Voluntary Agreement (CVA).

Chief executive Jacqueline Gold said landlords needed to recognise the retail landscape had changed.

Writing in Retail Week, Ms Gold said the ultimatum was “no idle threat”.

She said many landlords had been open to renegotiating rental costs but that others continued “to bury their heads in the sand”.

“I’m grateful to those landlords who have engaged in constructive discussions with us, and should we carry out a CVA, they will definitely not be compromised. To those who haven’t yet, there is still time to come to the table.

“It’s a shame we have to threaten a CVA in order to do this, but this is no idle threat.”

Ann Summers benefited from a boom in online orders during lockdown. As a result, the firm says it expects this year’s results to show significant improvement from last year. But its physical stores were forced to close temporarily.

Many retailers are concerned that store sales will be slow to recover given the continuing impact of the pandemic, making it hard to pay rents and business rates. Ms Gold said a CVA was the only way to resolve the problem.

A CVA is an insolvency procedure that allows a company to reach agreement with creditors regarding payment of all, or part of its debts.

“All of us retailers acknowledge that the way customers shop isn’t going to just go back to how it was before the pandemic,” Ms Gold wrote.

“That’s why we, like many retailers, think turnover-based rents are the way forward.”

Jacqueline Gold CBE
Jacqueline Gold said some landlords were clinging on to outdated terms

Ms Gold said she was optimistic about the future after reforms within the company and changes to product quality and price positioning.

She described 2019 as “the toughest year” in the company’s history, leading to a £16m loss last year.

“My family has ploughed large sums of money into the business to help us address the issues which held us back last year and get Ann Summers back on an even footing, with plans to invest further,” Ms Gold wrote.

“But there is no point doing that just to subsidise those landlords who continue to cling on to outdated terms.”