Office Outlet has announced a proposal to restructure its UK store estate as part of its ongoing turnaround strategy.
Office Outlet has spent the last two years performing an operational restructuring which has significantly improved the store operational performance of the company. However, given the significant decline in footfall at out-of-town retail parks, a proposal to restructure the fixed costs is required to lead to long-term profitability.
This follows the completion of a management buy-out of the company by the current management team, Chris Yates and Mark Logan.
Under the terms of the Company Voluntary Arrangement (CVA), Office Outlet is seeking to exit four stores during the latter part of 2018. The store closures will result in approximately 44 job losses, although every effort will be made to redeploy staff from the closure stores.
The other 95 stores, including the online business, will continue to trade as normal. The CVA meeting will be held on 6 September.
Daniel Butters and Robert Harding of Deloitte LLP, the business advisory firm, have been appointed as nominees to the CVA.
Chris Yates, CEO of Office Outlet, said:
“Given the challenging UK retail environment and our over-spaced and over-rented UK store estate, we are having to take tough but necessary actions to reduce our fixed cost base and restore long-term profitability.
“We have held constructive discussions with our key landlords and strategic partners and will now seek creditor approval on our CVA proposal. This will provide greater security for our staff, suppliers, landlords, customers and members. This is a successful brand and we are confident the Company will emerge in excellent shape from this process”
Daniel Butters, Partner at Deloitte, added:
“The retail trading environment in the UK remains extremely challenging, driven by weaker consumer confidence, the implications of Brexit and competition from online channels.
“The CVA will provide a stable platform upon which management’s turnaround plan can be delivered. We have fully engaged with the British Property Federation and its members and their views are reflected in what we believe is a fair proposal to restructure the property obligations of the Company.
“It is important to stress that no stores will close immediately and employees and suppliers will continue to be paid on time and in full.”
Stephanie Pollitt, assistant director of Real Estate Policy, British Property Federation (BPF) commented:
“These situations are never easy as property owners need to take into consideration the impact on their investors, including those protecting pensioners’ savings, as they vote on the CVA proposal. Office Outlet and Deloitte have, however, demonstrated best practice, engaging with the BPF early in the process, therefore ensuring property owners’ interests have been properly taken into account. Ultimately, it will be for individual property owners to decide how they will vote on the CVA, but the proposal has sought to find a solution that provides a sustainable future for Office Outlet.”
Don’t forget to follow Dealer Support on Twitter!