Accessorize & Monsoon to Close Stores to Fix Finances

/in

Article by Rob Davies

‘Dozens’ of less profitable stores could be shut as chain starts insolvency procedure

Fashion chain Monsoon Accessorize has become the latest high street retailer to deploy the controversial tactic of closing stores and seeking rent reductions in a bid to mend its finances.

Accountancy firm Deloitte has been hired to help the retailer secure a company voluntary arrangement (CVA), an insolvency procedure used by numerous struggling retailers and restaurant chains including Mothercare, New Look, Debenhams, Giraffe and Byron.

The increasingly common strategy involves closing less profitable or loss-making stores, while seeking agreement from landlords to reduce rents on other properties, rather than risk the company going bust altogether.

Sources told Sky News that “dozens” of Monsoon Accessorize’s 270-strong store network could disappear if the plan goes ahead, although the number of closures is yet to be agreed.

The largest shops, in both the Accessorize and Monsoon chains, are thought to be most at risk.

A spokesman for Monsoon Accessorize, owned by its founder Peter Simon, told Sky News: “The UK retail trading environment is tough and we are continuing to look at options to reduce our overall costs as we restructure the business in the UK and internationally.

“We have made no secret of the fact that we have steadily reduced our store portfolio in recent years and shall continue to do so as leases expire.

“We are looking at options to accelerate these store closures.”

Deloitte declined to comment on whether it was advising Monsoon Accessorize on the plan.

CVAs are supposed to be the last resort for companies that have run out of options and are flirting with bankruptcy.

But they have proved unpopular with landlords forced to slash rents, with some claiming that badly managed companies see CVAs as an easy way to cut costs rather than taking more fundamental action to improve their businesses.

The retail and hospitality sectors have been flooded with CVAs over the past couple of years. Philip Green’s Arcadia group, including Topshop and Topman, is expected to seek one imminently.