It is reported that New Look has given an ultimatum to landlords; trying to reach an agreement to move to turnover-based rents for its 500-strong store estate.
Consultancy firm, CBRE, have been hired to help with the process. If discussions with landlords are not successful, likelihood of the retailer falling into a pre-pack administration is high.
If a pre-pack is used, this would be the second financial restructuring it has undergone in less than two years, after its debt-for-equity swap with stakeholders in January 2019. At this last restructuring, New Look moved onto monthly rents for most of its portfolio and asked for rent holidays for some of its stores.
Talks with landlords have been happening for most of the month though concern rises that some will block the proposal.
A pre-pack has been discussed and is ‘’the last thing it wants.’’
A spokesperson said, ‘’We are committed to seeking a consensual agreement with landlords to move to turnover rents, and work in partnership with them as we continue to navigate these increbily challenging and uncertain times together.’’
The retailer employs 12,000 people across its UK and Ireland business.
New Look are not the first to look at a move to turnover rents amid the covid-19 pandemic. Frasers Group are the latest to be looking at doing so. Other retailers have appointed administrators as a result of the pandemic: Debenhams, Laura Ashley, Cath Kidston. Some have also refused to pay March quarterly rents.