Monsoon owner adds to deluge of shop closures
15 April 2019, 10:01 | Updated: 15 April 2019, 14:54
Monsoon Accessorize, one of the UK's biggest privately owned fashion retailers, is plotting the use of a controversial insolvency mechanism to close stores and slash rents amid ongoing high street turmoil.
Sky News has learnt that the group has appointed Deloitte to prepare a Company Voluntary Arrangement (CVA) that could be launched within weeks.
Sources said on Monday that a CVA would seek creditor approval for "dozens" of store closures, although they cautioned that precise numbers had yet to be finalised.
Sites earmarked for closure are expected to be the largest shops comprising both the Monsoon and Accessorize fascias, with one insider acknowledging that they were struggling.
The company trades from nearly 270 stores across the UK, many of which are expected to require landlords' approval for rent reductions even if they remain open.
The news is the latest blow to a high street reeling from the accelerating shift to online shopping and pressures on business costs and consumer spending.
Last week, Debenhams emerged from a brief spell in administration under the control of its lenders, with a CVA anticipated in the coming weeks.
Sir Philip Green's Arcadia Group, which owns Top Shop and Dorothy Perkins, is also preparing a CVA - on which Deloitte is also advising - to be launched in the near future.
The restructurings follow a wave announced last year, with prominent names including Carpetright, Mothercare and New Look all forced to seek creditors' approval for sharp reductions to their cost bases.
Last week, a survey by the professional services firm PricewaterhouseCoopers said that a net figure of almost 2500 stores disappeared from Britain's 500 largest high streets in 2018.
Monsoon Accessorize has been examining plans for a CVA for some time, but has been hampered by the complexity of some of its lease arrangements, according to retail analysts.
In response to an enquiry from Sky News, a spokesman for the retailer said:
"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." Under chief executive Paul Allen, Monsoon Accessorize's holding company, Drillgreat, has been closing stores when leases expired in recent years.
However, the intensification of the retail sector's problems has now led it to the brink of a CVA, which is typically only viable when the alternative for a company is bankruptcy.
Monsoon Accessorize is owned by Peter Simon, its founder.
Its most recent publicly disclosed results cover the year to 26 August, 2017, which showed an operating loss of just over £10m.
(c) Sky News 2019: Monsoon owner adds to deluge of shop closures