Beales seeks rent cuts to avoid closures

Historic department store Beales has filed a company voluntary arrangement (CVA) to the landlords of 14 of its 35 stores to seek a rent reduction of 70 percent so that it can avoid closing the units.

Beales claims that it has been hit in recent years by ‘legacy leases’ that it states no longer reflect market value and its proposed company voluntary arrangement divides its portfolio into two categories in order to save the business.

For the 14 stores near closure, Beales is looking to secure a 70 percent reduction in rent for 10 months while it negotiates whether to continue trading from the stores. The other 24 sites, which includes the company’s flagship store in Bournemouth, the leases will be retained at current rents which will be paid monthly as opposed to quarterly for three years.

Rob Croxen, restructuring partner at KPMG and proposed 'supervisor' of the CVA, said: “Founded in 1881, Beales is a familiar face on the high street of many towns and cities up and down the country. However, in recent years, the profitability of certain stores has been hampered by expensive legacy leases which were agreed many years ago.

“This CVA seeks to strike a balance which provides a fair compromise to the landlords, while allowing the viable part of the business to move forward. It’s particularly important to stress that none of the stores will close on day one, and employees, suppliers and business rates will continue to be paid on time and in full – something which we know from our work on previous CVAs is of critical importance to landlords.”

Beales needs to secure at least 75 percent creditor approval for its company voluntary arrangement, which will be voted on March 24. Beales also leases offices in Bournemouth and warehouses in Yeovil and Bolton.

This is a very similar proposal announced by high street chain BHS last week.

Image: Beales