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Ann Summers seeks rent reductions after it records a loss

Lauretta Roberts
07 April 2019

Ann Summers is the latest high street retailer to be seeking rent reductions on its store estate after recording a £3.2m operating loss.

The lingerie and sex toy retailer operates 106 stores and in the year to 30 June 2018 it recorded sales of almost £110m (up marginally year on year). The operating loss compared to an almost £3m operating profit in the prior year.

In the accounts, chief executive Jacqueline Gold said the market had been "challenging" and noted a drop in consumer confidence driven by "relentless media and political" activity.

However she added that the swing to a loss was "predominantly" down to significant investment in IT and a brand relaunch to underpin future growth. Additional "politically driven" costs had also been occurred due to the weakening of Sterling and the introduction of a higher minimum wage and Apprenticeship Levy.

Reports this weekend suggest the retailer is now seeking to reduce the size of its rent bill having hired property firm CWM to negotiate with landlords.

A property industry source told The Guardian that in recent years the brand, which has been positioning itself as empowering women, has been seen as an increasingly desirable tenant for major shopping destinations, whereas it had previously been considered to be "glorified sex shop" and drove a harder bargain on rent.

The company, which also organises Tupperware-style shopping parties across the nation, has also seen an increase in competition from more contemporary online brands such as Lovehoney.

Should negotiations with landlords fail to deliver the right result it is believed the company may consider entering a CVA (Company Voluntary Arrangement), an insolvency process that allows companies (with the backing of creditors) to pay back a portion of their debts over an agreed period of time. Many retailers are using the legal procedure to enable them to reduce their rent bills and close unprofitable stores ahead of lease expiration dates.

New Look is one of the high street's biggest names to be operating under such a procedure and it is understood Sir Philip Green's Arcadia is considering entering into a CVA to enable store closures, though his personal wealth and the fact the chain still reports a profit (albeit a falling one) could prove a stumbling block.

Read Ann Summers' update company profile in our master database of fashion, The Intelligence.

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