Landlords of Monsoon Accessorize have backed plans to cut the fashion chain’s rents at more than half of its shops.
Last month the retailer proposed a company voluntary arrangement, a form of insolvency used by businesses to avoid collapse. A “sizeable majority” of creditors approved it at a meeting yesterday and now 135 of the two brands’ 258 shops will benefit from rent reductions.
Paul Allen, chief executive, said: “This action will help us to reshape our businesses for the future and we will now turn our attention to the wider turnaround plan and delivering a sustainable and profitable business.”
However, industry critics claimed that businesses were misusing the restructuring scheme to cut their costs. Matthew Ogg, a policy adviser at Revo, a retail property body, called on the government to ensure that legislation on CVAs was fit for the present trading environment, which Monsoon has described previously as the worst in its 46-year history.
“The frequency of retailer CVAs and the growing number of stores and jobs affected risks further damage to our high streets and town centres, local authorities and pension fund investors, as well as to other retailers left at a competitive disadvantage,” Mr Ogg said.
Monsoon Accessorize began as a market stall on Portobello Road in west London, where Peter Simon, 69, its founder, sold coats. He now controls the business from the British Virgin Islands via Balmain Invest and Trade.
The company has closed nearly forty shops in the past two years, as well as moving some to smaller premises. Like Arcadia, New Look and Debenhams, which also have used CVAs, it has been hit by dwindling consumer confidence, the rise in the minimum wage and competition from online rivals.
Stephanie White, a property expert at Stevens & Bolton, a law firm, said: “Landlords may have been persuaded to give their support to the CVA by the profit share that Monsoon offered and it might become an expectation that tenants seeking CVAs in the future will offer similar sweeteners. While landlords will want to support their tenants to return to healthy trading, they have to balance their own books, too.”
