Retailer struggling with debt and difficult trading conditions
Carpetright will close 92 shops across the UK, putting 300 jobs at risk as it seeks to combat increasing financial pressure.
Shares in the group tumbled by 19 per cent at the open after it announced its plan.
The retailer first announced its intention of making closures last month, when it revealed it was battling difficult trading conditions, and that it expected its financial performance for the year to the end of April to be worse than previously expected.
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Carpetright the latest retailer to run into very heavy going
On Tuesday, Carpetright said it had identified 205 sites in the UK that are underperforming and/or on unfavourable lease terms,or “in certain cases, not expected to have significant strategic value to the company going forward”.
Under the terms of a company voluntary arrangement (CVA), which is deployed by firms who want to continue trading while dealing with debt problems, Carpetright will seek reduced rent and revised lease terms for the 113 sites it is not closing. The company hopes to get approval from both its creditors and shareholders for the CVA proposals by 30 April.
Meanwhile, the group is also expecting to raise £60m through an equity capital raising, using the proceeds to reduce debt and cover the costs associated with the CVA.
"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,” said Carpetright CEO Wilf Walsh.
"Completion of the CVA and equity financing will enable us to establish an appropriately-sized estate of modernised stores, on economic rents, complemented with a compelling online offer, enabling Carpetright to address the competitive threat from a position of strength.”