Carpetright plans to shutter more than 90 stores and slash rents at more than 100 other sites amid a “fundamental restructuring” of its property portfolio.
The struggling flooring firm said it has identified a total of 205 stores across the UK that are underperforming or have “unfavourable” lease terms.
Under the terms of a proposed company voluntary arrangement (CVA) unveiled this morning, Carpetright said it aims to close 92 of its 418 stores – a move that is expected to result in 300 job losses across stores and head office functions.
The retailer’s shops in Edinburgh, Sheffield’s Meadowhall, two stores in Leeds and a further two sites in Glasgow are among those earmarked for closure.
Another 113 stores will be subject to reduced rents and revised lease terms under the retailer’s proposals.
Carpetright will need to convince its creditors and shareholders to approve the CVA in two separate votes before it can proceed with the plans.
Creditors will be balloted at a meeting on April 26, before shareholders vote on the plans on April 30.
Carpetright also plans to raise £60m through an equity capital raising next month.
The proceeds will be used to fund its on-going strategy, reduce indebtedness and cover costs associated with the CVA.
Carpetright said trading conditions have “remained difficult” since it last updated the market on March 1, but boss Wilf Walsh insisted the CVA would help the business “deliver a successful turnaround”.
Walsh said: “These tough but necessary actions will enable us to address the burden of a legacy UK property estate consisting of too many poorly located stores on unsustainable rents and are essential if we are to restore our profitability and deliver a successful turnaround.
“Carpetright has engaged fully with the British Property Federation on the detail of the CVA Proposal and we thank them for their constructive approach.
“Completion of the CVA and equity financing will enable us to establish an appropriately-sized estate of modernised stores, on economic rents, complemented with a compelling online offer, enabling Carpetright to address the competitive threat from a position of strength.
“We will remain in close contact with all colleagues to keep them fully informed as we move through this process.”
As previously revealed by Retail Week, the retailer drafted in Deloitte last month to advise on the firm’s future after it issued three profit warnings in as many months.
It blamed a sharp drop in consumer confidence and footfall for its woes.
Carpetright later confirmed it had secured a £12.5m loan from shareholder Meditor European Master Fund to cover its short-term costs.
At the time, Walsh took a swipe at Carpetright’s former management, blaming it for the business’ property issues.
He said: “The aggressive store opening strategy pursued by the company’s previous leadership has left Carpetright burdened with an oversized property estate consisting of too many poorly located stores on rents which are simply unsustainable.”
Carpetright founder and former boss Lord Harris exited the firm in 2014.
He and his son Martin Harris went on to launch rival floorings firm Tapi Carpets, which now has 95 stores – the majority of which are in close proximity to Carpetright shops.