Carpetright to close quarter of stores in restructuring plan

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Retailer Carpetright says it is closing 92 stores and cutting 300 jobs as part of a restructuring plan.

It recently said it had started talks with lenders to ensure it does not breach the terms of its bank loans.

The chain is planning a company voluntary arrangement (CVA), which will allow to it to shut the worst-performing stores and ask for rent concessions on another 113 sites.

It is the latest in a long list of businesses to run into trouble.

Retailers are being pummelled by a range of problems, including a shift from High Street shopping to online, as well as consumers having to tighten their belts with inflation outstripping wage growth.

Shares in Carpetright fell 16% to 35p in morning trading.

Carpetright, which has more than 400 UK shops, has been struggling with underperforming outlets which have made its rental costs harder to shoulder.

There have been similar, recent CVA arrangements at fashion retailer New Look, restaurant chains Jamie’s Italian and Prezzo, and burger chain Byron.

‘Tough actions’

As part of its announcement on Thursday, it also said it had identified a “technical breach” in its borrowing agreement.

The company said it would raise £60m through a placing of new shares, which would raise money to cut debt and pay for the restructuring plan.

The CVA needs approval from creditors, which it will seek at a meeting on 26 April, and it will then hold a meeting with shareholders to ask for their approval on 30 April.

The company gave a profit warning at the beginning of March. It added that trading conditions had remained difficult since then, but that it still expected to make only a small underlying pre-tax loss for the year.

Wilf Walsh, Carpetright’s chief executive, said: “These tough but necessary actions will enable us to address the burden of a legacy UK property estate consisting of too many poorly located stores on unsustainable rents and are essential if we are to restore our profitability and deliver a successful turnaround.”

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