According to reports over the weekend, La Senza, the lingerie and clothing chain with 180 stores, is looking to restructure its business. The owners, Lion Capital, have been speaking to advisors about how they can close or sell some of their underperforming stores.
It is understood that as many as 66 of the stores are leased via Contessa, the sister lingerie chain, that was acquired in 2004.
This could mean that there is the option to put any unwanted leases into Contessa and sell or close them, at a time of dreadful trading on the high street. Up to a quarter of the lingerie group's 180 branches could be offloaded.
Of course, the landlords would have to agree to any assignment of the leases into Contessa. However, if it was just the Contessa leases that are poorly performing then it could be argued that Contessa could be put into liquidation or administration and the leases disclaimed. However this scenario is unlikely. There are issues of whether these leases have been novated into La Senza as they have been paying the rent on them.
Other options could be a CVA which will allow the chain to offload underperfoming stores.
The outcome very much depends on the position of the landlords and whether the poorly performing stores are leased via Contessa or not. Matters will be brought to a head on the rent quarter day on 29th September 2011 no doubt.