Carpetright mulls CVA as part of turnaround mission

It is understood that Carpetright, which has issued three profit warnings since December, has been working with the advisory firm to explore a range of solutions. 

Although no final decision has been made, industry sources told Retail Week that a CVA was Carpetright’s “preferred option” as it would enable the retailer to exit underperforming stores.

Carpetright has at present around 418 UK stores, but chief executive Wilf Walsh has previously stated that the ideal number would be between 300 and 400.

Earlier this month, Carpetright said it expects to report a “small underlying pre-tax loss” in its current financial year following weak UK sales – a sharp drop from the previously estimated range of £13.8m to £16.5m.

At the time, the retailer said it had kicked off talks with lenders to ensure compliance with terms of its existing facilities.

Carpetright told Retail Week: “As announced on 1 March we are examining a range of options to accelerate the turnaround of the business and strengthen its balance sheet. This process is ongoing and the group will update the market on these initiatives as required.”

Earlier this month, New Look unveiled plans to launch a CVA. Creditors are due to vote on the strategy next week. If it goes ahead, the retailer will close around 60 stores and slash its rent bill.

House of Fraser is also seeking rent reductions from a number of its landlords.