Relief for Mosaic as it wins monthly rents concession

Fashion group Mosaic has struck an agreement to ease its cash flow by paying rent monthly.

The deal will enable Mosaic – which owns brands including Warehouse, Karen Millen and Oasis and has 1,500 UK outlets including concessions – to run its finances more effectively at a time when retailers are likely to endure torrid trading conditions.

Mosaic deputy chief executive Mike Shearwood said: “In line with many retailers on the high street, we have reached an agreement with our principal landlords to smooth out cash flows and we are moving to monthly rent payments for the next quarter date.”

The decision came as the next quarterly rent day approaches on Christmas Day, requiring retailers to stump up three months’ rent in advance. Many stores’ cash flows are also being put under pressure as supplier credit insurance cover is pulled as the retail environment deteriorates.
There has been widespread speculation over Mosaic’s future following the collapse of the Icelandic banking system, and its suppliers’ credit insurance has since been pulled.

The fashion group, which is backed by beleaguered Icelandic bank Kaupthing and investor Baugur, has debts of£334 million.

One of the UK’s biggest landlords said it had agreed to Mosaic’s request on the basis that it strongly believed in the future of its brands and that, given time to resolve its debt situation, the business has a strong future.

Shearwood added: “Due to our long-standing relationship with our suppliers, they are continuing to supply us in line with their commitments and are being paid as per their normal terms and conditions, even though they have had their credit insurance pulled.”

One retail investor cautioned against reading Mosaic’s shift to monthly payments as a sign of distress. He said: “Every retailer is trying to get some headroom.”

He added the deal would give Mosaic time while the Icelandic authorities “call the shots” over its future.

He said: “The bank is looking at the business and thinking: ‘We are owed£330 million: do I let the whole thing go into receivership and sell the brands as fire sales or do I support them?’ I would look at keeping the brands together and covering my investment.”

It is understood that potential suitors are circling Mosaic and its brands.