The collapse of Focus into administration shows why landlords were wrong to back its CVA.
Want to know more about Focus?
The demise of Focus, revealed exclusively by Retail Week last week, will have come as no surprise to anyone who has followed the company since it was sold to Cerberus for £1 in 2007. That, of course, makes it no easier for those who work for the company, but at least means that any business which chose to supply or support it should have been aware of the risks.
So why in 2009 did Focus’s landlords approve a CVA, when it was clear all it would do is prolong the time before its inevitable demise whilst giving it an unfair advantage in the meantime and therefore alienating rival retailers which were good tenants?
CVAs are a mystery to me. I can see that landlords don’t want empty shops on their books, especially in these days of empty rates. I also can see that it puts them in the awkward position of playing God over the jobs of thousands of people.
But the market for retail park stores in particular has improved, and the likelihood is that we’ll see the vast majority of the Focus shops snapped up, which will hopefully mean most of the company’s staff will transfer to retailers where they have a brighter future. Kingfisher has already snapped up 31.
The history of CVAs is not illustrious, and while the jury is still out on JJB and Blacks - which made a mockery of the system by taking stores in towns where it had handed back stores as soon as the CVA went through - I can’t think of one company which has returned to long term health post-CVA. I can’t think of another situation where companies - in this case landlords - help their worst customers at the expense of their best ones. They should think twice before backing more CVAs.