Following the news that UK kitchen retail giant Magnet was heading into a CVA and closing 15 stores, kbbreview has learned that a further 37 showrooms are also facing uncertainty with their leases currently under negotiation with landlords.
Magnet disclosed the number of stores in landlord negotiations during a meeting with creditors earlier this week. With a current retail estate of 159 stores, the number of locations impacted by rental negotiations totals roughly 23% of Magnet’s store empire.
Magnet told meeting attendees that its intention is “to keep as many stores operating as possible”, with more than 100 retail locations remaining entirely unaffected by the CVA proposal.
A Company Voluntary Arrangement (CVA) is a process which allows a financially strapped business to repay a portion of its debts over an agreed period. During the meeting, Magnet explained that its own CVA will be primarily focused on “addressing unsustainable store lease costs for a small number of [its] stores”.
Magnet will now have to get approval from creditors (some of which are landlords of its sites) on the CVA deal. If the arrangement is agreed, Magnet will then be able to “address unsustainable property costs in a controlled and structured way”.
Explaining its long-term plans throughout the CVA process and beyond, Magnet told creditors that it is first seeking to “address property costs that no longer reflect the business we are today”. Following that, the retailer’s priority is to “reduce complexity and strengthen the route back to sustainable profitability”, with a view to invest in further growth down the line.
Magnet also urged creditors for their continued supply and service, saying that this will “help us serve customers, support stores and protect momentum”.
In addition to the CVA proposals, Magnet also said it was taking steps to resolve remaining property costs at one of its production sites, however Magnet clarified the site has already been “exited operationally” and suppliers will therefore see no disruption.
Announcing its CVA proposals publicly on Wednesday, Magnet reassured colleagues impacted by the closures that they will be supported throughout the process and that “suitable alternative roles within the business will be offered wherever possible”.
Additionally, Magnet promised customers they will not be impacted and that orders will remain a priority for the business. The retailer explained that customers with orders through a store that is proposed to close will apparently have their orders transferred to their closest alternative Magnet location.
kbbreview has reached out to Magnet for further information, however the retailer said it was unable to provide a comment while the CVA legal process was ongoing.