Moss Bros, a prominent retailer specializing in men’s formalwear, is currently exploring the option of implementing a Company Voluntary Arrangement (CVA) to navigate the difficult circumstances presented by the lockdown and the cancellation of key events. In response to these challenges, the company is considering the closure of certain stores and renegotiating rent agreements to better align with the evolving retail landscape.
The core business model of Moss Bros relies heavily on customers purchasing or renting suits for various formal occasions, including office attire, weddings, and prestigious events like Royal Ascot. However, with a significant number of individuals now working remotely and events being either postponed or cancelled, the company has observed a substantial decline in sales compared to other segments within the fashion industry.
Reports suggest that KPMG has been enlisted to manage the potential CVA process, which may involve seeking reductions in rent and identifying stores that are no longer financially viable for the business. Despite engaging in discussions with landlords regarding potential turnover-based rent arrangements, no mutually beneficial agreement has been reached thus far.
Earlier this year, Moss Bros was in the midst of an acquisition deal by the owner of Crew Clothing for £22 million. Unfortunately, the onset of the lockdown prompted the prospective buyer to reconsider the transaction, eventually leading to regulatory authorities blocking the deal. This development left Moss Bros in a precarious position, with 125 stores and around 1,000 employees, facing an uncertain future in a retail landscape post-pandemic.
Even as life gradually returns to normal, retailers specializing in formal attire are expected to encounter continued challenges. Recent changes within the sector, such as the acquisition of TM Lewin by new ownership resulting in the closure of all UK stores and substantial job cuts, underscore the ongoing difficulties faced by formalwear specialists in the current market.
The potential implementation of a CVA by Moss Bros aligns with the broader trend observed within the industry, as companies strive to adapt to the new realities brought about by the global health crisis. The fashion sector as a whole is undergoing significant transformations, with businesses reassessing their operational strategies and business models to endure and thrive in this unprecedented environment.
For more information on Company Voluntary Arrangements (CVAs) and their implications for businesses, visit here.
To learn more about the challenges facing retailers in the fashion industry amid the COVID-19 pandemic, click here.
