Office Outlet to shutter stores in CVA

Office Outlet is preparing to close a handful of its 96 stores as part of a company voluntary arrangement, in a move that has gained support from the British Property Federation. The stationery chain, formerly known as Staples, outlined proposals for a CVA – a controversial insolvency procedure that allows a retailer to close stores and cut its rent bill – as part of a continuing turnaround strategy. The move will affect four stores staffing around 44 employees, although the company has said “every effort will be made to redeploy staff from the closure stores”. According to Radius Data Exchange, the CVA means that 4.3% of its overall store portfolio, equalling 64,000 sq ft, is at risk of closure, based on an average store size of 16,000 sq ft. This would take the total amount of retail space relinquished through CVAs and administrations this year to 15.6m sq ft. The retailer blamed a significant decline in footfall at out-of-town retail parks, resulting from recent retail failures and the current retail environment. It explained the CVA formed part of an effort to restructure the fixed costs required to put it on track to long-term profitability. Challenging environment Chris Yates, chief executive 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.” The decision has gained backing from the BPF. Stephanie Pollitt, assistant director of real estate policy at the BPF, said: “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.” Deloitte partners Daniel Butters and Robert Harding are advising Office Outlet on its restructuring. The CVA meeting will be held on 6 September. Stable platform Butters said: “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.” Office Outlet is owned by its leadership team, headed by turnaround specialist Yates, following a management buyout from restructuring firm Hilco. Yates has also held chief executive roles at womenswear brand Moda in Pelle, maternity retailer Mamas & Papas, parenting retailer Kiddicare and accessories chain Lovisa. Hilco had bought Office Outlet in 2016 from the US parent of Staples. To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette