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Office sidesteps CVA as dozens of store closures loom

The shoe retailer Office is plotting the closure of up to half its UK stores as it becomes the latest chain to confront the impact of brutal high street trading.

Sky News has learnt that the South African-owned company is drawing up plans to axe dozens of its 100 shops as their leases expire in the next few years.

Office has been exploring a restructuring plan for the last few weeks, but is no longer considering implementing the closures through a Company Voluntary Arrangement (CVA) – a frequently used mechanism to deliver store closures and rent cuts.

Sources said on Friday that Truworths International, Office’s owner since 2015, was likely to finalise its plans for the chain in the near future.

Decisions about some stores’ future would be taken as they approached the end of their leases, the sources added.

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Those which are earmarked for closure will not shut immediately.

Johannesburg-listed Truworths is scheduled to report full-year results next week.

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A spokesperson for Office said: “We have no immediate plans to close down stores. We remain in discussions with our lenders and talks are progressing well.”

Office’s lenders are being advised by Deloitte, the big four accountancy firm.

Truworths bought the Office chain in 2015 in a deal worth about £250m.

In addition to its UK estate, it trades from stores in Germany and Ireland.

Image: House of Fraser is among the businesses to have turned to CVAs

It was unclear on Monday whether Office’s overseas shops would be affected by the restructuring programme.

The pursuit of shop closures makes Office the latest in a deluge of fashion and other retailers to be forced to reduce their high street footprints amid a slew of bankruptcies.

Sir Philip Green’s Arcadia Group, which owns Top Shop and Burton, recently saw a CVA approved but is awaiting the outcome of a legal challenge.

Debenhams, which Sky News revealed this week was turning to an A&M partner as its new chief executive, is also facing a legal challenge – funded by the Sports Direct International tycoon Mike Ashley – to its own restructuring.

Image: Debenhams is facing a legal challenge to its own restructuring

In the last two years, Carpetright, House of Fraser, Mothercare‎, New Look and Toys R Us UK have all turned to CVAs to give them a fighting chance of survival.

Some have collapsed into administration even after the approval of CVAs.

Office was among House of Fraser’s creditors when it fell into insolvency proceedings last year, and was owed £700,000 in concession payments by the department store chain, according to reports.

Office was reported to have said earlier this year that “continued concerns over Brexit and depressed consumer demand” had affected its business, but insisted that it was “in a strong position to continue to grow”.

An insider said that a new store concept on London’s Carnaby Street had been “performing well”.

SOURCE : https://news.sky.com/story/office-sidesteps-cva-as-dozens-of-store-closures-loom-11780870

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