Sports Direct is threatening to close Republic stores by the end of June unless 75% of landlords agree to new terms.
In a letter seen by Retail Week and sent last night, Sports Direct chief executive Dave Forsey outlined improved terms for landlords from those the sports giant demanded in March, but warned the support of a majority of landlords is essential if the Republic format is to have a future.
In March - a month after acquiring 114 Republic stores out of administration - Sports Direct asked landlords to accept Republic rents based on 15% of the store’s turnover.
However, sources told Retail Week that as a result of landlords unwillingness to comply to the deal, Sports Direct has come back with better terms, which include it paying the higher of either half the current passing rent, or a sum equal to 15% of turnover for each store to cover rent, rates and service charge.
Forsey wrote: “We have received an encouraging response from Landlords accepting our offer of rent, rates and service charge at 15% of turnover for each store. However, following feedback, we are now revising our proposal.”
Forsey cautioned that landlord compliance on terms - including a three-month break clause and monthly rents - is essential.
He wrote: “The new Republic format relies on the leading branded suppliers viewing it as a viable proposition. Therefore, circa 75% of all landlords across the Republic portfolio must agree to the above proposal, otherwise we will have no other option but to close the stores prior to the June quarter day.”
One property source told Retail Week landlords are likely to agree to the improved terms.
Forsey continued: “Our strategy for Republic is aligned with that of its sister company USC, which we have owned since the summer of 2011. We believe the new Republic format will firmly establish us as the leading multi branded retailer in the UK offering the most comprehensive range of premium footwear, denim and street clothing. Our USP is that we offer leading global brands for both men and women in an aspirational environment and great customer service.”
Sports Direct could not be reached at the time of writing.