It was reported in the Sunday Times that Jack Wills, the chain popular with wealthy students and graduates, has been burning through cash and is facing a difficult summer. The company has switched suppliers recently in a bid to improve margins and much of its summer stock is already discounted.
It is believed that another cash injection or a restructuring scheme will be required, before the end of summer.
Since taking control of Jack Wills in 2016, BlueGem has pumped in £18m of cash and arranged a further £10m lifeline from Italian businessman, Giorgio Girondi. The company also have a £25m credit line from HSBC, which has some security over their assets.
Jack Wills had sales of £139.5m in the year January 2018, but has made pre-tax losses of £129.3m.
They had an affected trading period this spring/summer, as poor weather impacted on high street sales, leaving retailers no choice other than to place discounts on their ranges.
A CVA is one way Jack Wills can use to restructure its rents and premises, but many landlords have been emboldened by their success in limiting the impact of Arcadia's CVA that it may not prove to be the best way forward for them. EY are expected to help negotiate revisions to Jack Wills' business model and examine their ongoing future financing needs.
The outcome of the CVA that Monsoon is proposing this week will be watched closely as an indication of how landlords are going to react to any more that might come their way.
Categories: What is a CVA or Company voluntary arrangement?