WHSmith demands rent cuts as pandemic hits revenues

The retailer has drafted in property adviser Gerald Eve to try to thrash out deals with landlords across its portfolio of 575 town centre stores and 560 travel hub locations across the UK, according to The Sunday Times. 

The company is reportedly threatening landlords with a company voluntary arrangement (CVA) to push the cuts through if they don’t agree to ad hoc changes and rent holidays - a charge that a spokesman for the retailer denied. 

“Like all retailers, WHSmith has been impacted by Covid-19, and footfall remains depressed,” WHSmith said. “We are working collaboratively with the vast majority of our landlords.”

The company has been hit hard by the collapse in commuting and travel due to the ongoing coronavirus pandemic, and said last week it expected to make a loss of between £70m and £75m for the year ending August 31.

Group revenue was initially expected to be between 80% and 85% from April until August 31 against the same period in the previous year. However, WHSmith said it had seen a gradual recovery, with group sales down 57% year on year in July. This was largely driven by high street stores, where sales were down 25% in July.

As a result, the retailer confirmed it would be undertaking restructuring, which would result in as many as 1,500 redundancies across the business. 

The effects of the near three-month closure of stores combined with slow footfall recovery and suppressed consumer confidence has seen many retailers look to slash rents and close stores. 

Retail Week revealed last week that fashion retailer River Island was mulling a CVA in a bid to lower its cost base. 

New Look, too, has been considering a potential CVA since the end of June in a bid to force landlords to move leases over to a turnover base across its 450 stores.