Primark is demanding that landlords cut its shop rents by 30 per cent after struggling high street chains used insolvency tools to slash theirs.
New Look, the Topshop owner Arcadia and Monsoon used company voluntary arrangements (CVAs) to close stores and reduce their bills.
CVAs have doubled in the past two years as bricks and mortar retailers have been caught out by the rise of online shopping. The CBI reported that retailers had recorded the longest period of falling sales for eight years.
Primark, which has so far resisted launching an online store, has 189 shops in the UK and made £7 billion of sales last year. In return for rent reductions, the discount fast-fashion retailer has been offering landlords lease extensions or an investment in store refurbishment. “We have a duty to our shareholders to maintain a competitive cost base,” Primark told The Sunday Times.
Its demand will add to the woes of Britain’s listed property companies, including Intu and Hammerson, which are facing investor scrutiny about the inflated values of shopping centres.
Next has secured average rent reductions of 29 per cent. WH Smith is paying no rent on a handful of stores while Julian Dunkerton, co-founder of Superdry, warned that if landlords did not agree to rent cuts he would shut shops. Hotel Chocolat’s founder, Angus Thirlwell, said “arrogant and dominant property owners” were now being forced to be more supportive of retailers.