JD Sports boss says retail CVAs will ‘accelerate’ post-coronavirus

The sports fashion retailer, which posted an uplift in full-year profits and strong sales in its full-year results, launched a controversial pre-pack administration for subsidiary Go Outdoors last month in a bid to secure more competitive rental prices across its 67-strong store estate.

Boss Cowgill told Retail Week that arrangements of this nature would become more commonplace as retailers grappled with footfall declines and property negotiations in the wake of the coronavirus pandemic.

“All JD stores were successful to varying degrees before the pandemic, however I think there was already evidence of a movement towards online even before coronavirus. Our store estate can be retained but has to be repriced and that has to be recognised by bondholders and the financiers of shopping centres,” he said.

“Landlords themselves are starting to recognise that there is a repricing issue, but the only way that is occurring in shopping centres is by lease breaks or expiries if you are fortunate enough, otherwise it’s pre-packs and CVAs.

“We’ve seen a number [of CVAs and pre-pack administrations] during this period and they will continue and accelerate, because they are a route towards market value rents which are long overdue.”

As part of this dynamic, Cowgill did not rule out store closures across JD Sports’ portfolio.

“It is not necessarily true that we have an excess of stores, but if you look at the numbers you could argue there is an excess of store numbers at the existing rents,” he said. 

Cowgill said that despite an initial surge in footfall when stores reopened last month appetite is now more subdued, particularly in shopping centres and over previously busy periods such as weekends.