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Carpetright announces closure of Surrey stores

4 minute read
Carpetright announces closure of Surrey stores

Published by the Eagle Radio News Team at 9:51am 12th April 2018. (Updated at 10:25am 12th April 2018)

Carpetright has announced it is closing down 92 stores countrywide, including its branches in Guildford and Redhill.

It means 300 job losses across the country - although the struggling flooring retailer says it is hoping to relocate affected staff.

The Ladymead store in Guildford and the Redhill High Street store are not expected to shut before September this year.

As part of a sweeping restructure, Carpetright also says it has managed to cut rent on another 113 struggling outlets.

The move follows a review which found 205 sites were underperforming or were on unfavourable lease terms.

The beleaguered retailer, which employs 2,700 people in the UK, said 11 of the sites earmarked for closure had already stopped trading.

Carpetright, which trades from 409 shops across the country, revealed last month that it was exploring a strategy to get back on its feet after battling difficult trading conditions.

It also warned it was likely to slump into the red this year and was looking at a range of options to beef up its balance sheet.

The company said since its last update in March, trading had remained "difficult" and it still expected to report a loss for the year to 28 April.

The restructuring comes under a Company Voluntary Arrangement (CVA) - a form of insolvency aimed at protecting a business from going bust by cutting its costs.

The firm said the CVA would help it to "address the competitive threat from a position of strength".

It also confirmed it was seeking to raise £60m from investors to fund plans to reboot the business and bring down debt.

Commenting on the CVA Proposal, a Carpetright spokesperson said: “We’re announcing today some tough but necessary steps to address our legacy property issues and restore our profitability.

"We are launching a CVA proposal that, if approved, will result in the closure of 81 poorly located or over-rented stores, from a UK total in excess of 400, later this year. 

"Planned closures will not affect our customers, all orders will be fulfilled either by the original store or a neighbouring Carpetright where necessary. 

“Regrettably, we expect this will mean that around 300 colleagues would leave the business but we will make every effort to find alternative roles for those affected wherever possible.

"We’re also announcing that we plan to follow the CVA with an equity financing to raise £60m of new funds to invest in our stores and online offer, to strengthen the competitive position of the ongoing business.

 “It’s important to stress that throughout the CVA process, we will continue trading as normal and customers can continue to shop with Carpetright with confidence. We do not expect the proposed stores to close before September 2018.

“We will remain in close contact with all colleagues to keep them fully informed as we move through this process."

The company's shares tumbled by 24% at one stage in early trading after the proposals.

The details came as it revealed a "technical breach" of its banking arrangements, but the group said it was taking action to address this and ensure it is amended for the future.

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