Moss Bros launches CVA proposal
Moss Bros has today launched its anticipated CVA proposal as it continues to be put under extreme pressure by on-going Government-imposed restrictions due to COVID-19.
The men's formalwear retailer said its proposal would give it "the best chance possible of emerging from lockdown in a manner which secures the long term future of the business".
Moss Bros, which was acquired earlier this year by Crew Clothing owner Brigadier Acquisition Company, hired KPMG at the end of August to assess its options and is understood to have been in negotiations with landlords about a move to turnover-based rents.
However the latest lockdown has forced the business, which operates 128 stores and employs 800 staff, to advance a proposal for CVA, the exact details of which are yet to be revealed.
Moss Bros CEO Brian Brick said: “Prior to the Covid-19 pandemic the group was trading robustly versus last year, despite operating in a challenging business environment. At the outset of the pandemic, we managed to reduce costs and furlough staff in order to survive the first lockdown. There was then a glimmer of hope as we began to reopen some stores in the summer period, but even then trading was severely impacted, footfall was extremely low and sales were substantially down on the previous year.
“With the introduction of further lockdown measures, and with the outlook for trading remaining depressed, the group now faces no alternative but to try and limit our fixed costs and we have therefore made the tough but essential decision to undertake a CVA in order to protect the future of our business and people. I am extremely grateful for the support and understanding of our staff in the stores, distribution centre and head office, as well as our shareholders, landlords, suppliers and customers as we proceed with the restructuring process to safeguard our business and protect jobs. This, as always, remains our primary focus.”
Moss Bros has not only been hit by the closure of non-essential retail but also the cancellations of large social gatherings and the downscaling of weddings, as well as the shift to working from home, which have all hit demand for formal clothing and its hire business.
Will Wright, partner at KPMG and joint nominee of the CVA, added: “Restrictions on large gatherings have had a savage impact on Moss Bros, and without taking further action, the situation facing the company is perilous. The CVA proposals put forward today seeks to strike a fair compromise for creditors, while providing the business with the lifeline it needs to be able to emerge from the crisis.”
Brigadier paid £22.6m for Moss Bros, taking it private, but had tried to withdraw its bid in April as the magnitude of the pandemic became clear. However the Takeover Panel ruled that it needed to honour its bid and buy the company as COVID-19 had already been declared a pandemic when the bid was made.