The Covid-19 pandemic has been an extraordinary time for all retailers. With all our stores closed at Ann Summers, the focus shifted to online, and thanks to the heroics of our colleagues, we managed to meet a significant step up in demand while people were in lockdown. I can’t imagine why…

Our stores have now reopened and we are looking to the future with optimism. After the toughest year in our history in 2018/19 – partly owing to some self-inflicted own goals – the business is now back on track. 

We’ve strengthened our leadership team, resolved some big IT issues and improved our product quality, price positioning and marketing.  

All this work will mean our 2020 numbers will show a significant improvement in the £16m loss that our accounts will show we recorded in 2019.

The implications of Covid-19 on our industry are much broader than the immediate hit on our financials. All retailers acknowledge that the way customers shop isn’t going to just go back to how it was before the pandemic. 

Many more shoppers have discovered the convenience of online, and people are reluctant to travel into city centres, especially if it requires public transport. More working from home will mean less passing trade for a long time to come.

These are long-term, possibly permanent, changes and they mean that landlords must take a more pragmatic approach to rents. 

Ultimately, no retailer can afford to run stores unprofitably and with business rates set to return next spring the challenge of property costs is going to become even more pressing than ever.

“No retailer can afford to run stores unprofitably and with business rates set to return next spring the challenge of property costs is going to become even more pressing than ever”

We want to work in partnership with our landlords and our interests should be aligned. That’s why we, like many retailers, think turnover-based rents are the way forward. 

It’s no coincidence that outlet centres and travel retail have been two of the few success stories in bricks-and-mortar retail in recent years, and these are the places where turnover rents are the norm. 

We recognise that our landlords are businesses too and we understand they will need a return. I’m pleased to say the majority of ours are sensible and have been open to negotiations. 

However, there are some who haven’t and who continue to bury their heads in the sand when it comes to these discussions. And the way the system is set up, if they won’t come to the table, the only way a retailer is able to resolve the situation is to undertake a CVA.

Last resort

We are still working with all our landlords and a CVA isn’t something we would do lightly. A CVA is a restructuring process and historically has been seen negatively by external and internal stakeholders. But increasingly we have seen a number of retailers with historically strong businesses and supportive owners finding themselves with no option but to use this facility.

In the case of Ann Summers, my family has ploughed large sums of money into the business to help us address the issues that held us back last year and to get Ann Summers back on an even footing, with plans to invest further. But there is no point doing that just to subsidise those landlords who continue to cling on to outdated terms.

I’m grateful to those landlords who have engaged in constructive discussions with us and should we carry out a CVA they will definitely not be compromised. To those who haven’t yet, there is still time to come to the table. It’s a shame we have to threaten a CVA in order to do this, but this is no idle threat.

Whatever the outcome, Ann Summers has a bright future. We believe in stores, as a key part of our offer alongside our ever-improving online channel and our unique and rapidly growing direct selling business. 

And we don’t want to lose brilliant colleagues. But it needs everyone to do their bit, including landlords. Otherwise there will be many more of us forced to go down the CVA path.