Carpetright explores feasibility of CVA
Flooring retailer Carpetright has said it is exploring the feasibility of a company voluntary arrangement that would enable it to accelerate the closure of unprofitable stores and improve the long-term prospects of the business.
The news follows the retailer’s announcement earlier this month in which it said it was examining a range of options to speed up its turnaround and strengthen its balance sheet.
In a statement issued today, Wilf Walsh, chief executive of Carpetright, said: “I am pleased that we have secured this additional support from one of our major shareholders as we continue to explore the feasibility of a CVA and a conditional equity issue. These further cash resources will enable us to make the necessary decisions free from short term funding pressure.
“The aggressive store opening strategy pursued by the company’s previous leadership has left Carpetright burdened with an oversized property estate consisting of too many poorly located stores on rents which are simply unsustainable. The company has worked hard over recent years to address this legacy issue and reduce the size of its property estate, however many of these poor performing stores still have long leases to run, which has limited our ability to exit a meaningful number in the short-to-medium term.
“While the board is confident that its brand investment and store refurbishment strategies have been, and will continue to be, successful in enabling Carpetright to respond to increased competition, it believes additional measures are necessary to directly address this legacy property issue.”
Walsh said it was “business as usual” for the company’s stores as they look forward to the important Easter trading period. It is also remaining in “close contact” with staff to keep them fully informed on the plans.
Following the CVA, Carpetright intends to raise between £40 million and £60 million through an equity issue. The proceeds will be used to fund Carpetright’s ongoing strategy, reduce its debt and cover the costs of the CVA.
