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Carpetright plans to close 60 stores in rescue plan

Carpetright new frontage

Following an night of turmoil at Carpetright, they have been able to secure an emergency loan of £12.5m from shareholder Meditor, which will provide the much-needed working capital to help the company work through their current problems.

The firm, which has 409 UK shops is looking to close stores as part of a turnaround plan and is also considering a company voluntary arrangement (CVA) that would let them shut unprofitable shops and slash rents. At this stage, it's unclear how many stores could be closed but it's likely that jobs will be at risk.

CEO of Carpetright, Wilf Walsh took a swipe at the company's previous management for creating a sprawling portfolio of stores. “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.

"The Company has worked hard over recent years to address this legacy issue and reduce the size of its property estate, however many of these poor performing stores still have long leases to run, which has limited our ability to exit a meaningful number in the short-to-medium term."

If the CVA goes ahead, they would be looking to raise up to £60m from investors to reduce the debt.

Mr Walsh said it would be "business as usual" for the flooring firm's stores during Easter and it would remain in "close contact" with staff over its restructuring plans. Carpetright shares initially rose on the news, but then fell back to trade 0.6% lower.

Source: Insight DIY Team

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21 March 2018

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