New Look reveals detailed CVA plan to move shops to turnover-based rents

New Look has unveiled its Company Voluntary Arrangement proposal following negotiations with landlords, in a plan aimed at moving hundreds of shops to a turnover-linked rent model.

Earlier this month the fashion retailer, which has been hurt by the coronavirus crisis, said it was talking to banks and bondholders about recapitalising the business. It today announced that it had received the support of 80% of its bondholders and 100% of its banks for the recapitalisation, conditional on a CVA which has been launched today.

A CVA is restructure method which companies typically use to axe stores or reduce rent payments. As part of its CVA, New Look wants to move most of its stores to a turnover-based rent model, which is a way of allowing tenants to pay rent based on how sales perform.

New Look had to shut stores for the Covid-19 lockdown and could only reopen them from June 15. Even before the outbreak it was grappling with headwinds on the High Street, such as high business rates.

Chief executive Nigel Oddy today said: “Covid-19 has changed the retail environment beyond recognition, accelerating the permanent structural shift in customer spend and behaviour from physical retail to online, which we have seen in recent trading. Despite this, we still fundamentally believe the physical store has a significant part to play in the overall retail market and our omnichannel strategy.”