Select files for a CVA for the second time
Value fashion chain Select has filed for a CVA for the second time after its first attempt ended in administration earlier this month.
Business adviser Quantuma, which oversaw the first CVA – launched last year – and the subsequent administration, is leading the process.
A meeting has been convened for 11 June at which the company’s creditors will vote on the company’s future. No store closures are planned as part of the proposals and nor does it propose any redundancies, though it does not rule out the possibility.
Its last CVA centred on cost cutting and rent reductions but the business suffered a sharp downturn in sales towards the end of last year, which derailed the process, said Quantuma partner Andrew Andronikou.
Andronikou added: “Low levels of consumer confidence, together with Brexit uncertainty and volatile currency, have meant that sales remained subdued in early 2019. The inevitable result was a squeeze on cash flow.
“The turnaround plan embarked upon by the management delivered benefits but had not reached sufficient maturity to protect the business from this impact in the market. There remains the opportunity, with the support of its parent company, to bring these to fruition and in doing so return the business to a stable and profitable position.
“As joint administrators, we have arrived at the view that a CVA offers the best outcome for creditors as a whole. The proposal does not outline the immediate closure of any of the company’s stores, and any immediate redundancies, however some may occur even if the proposal is approved.
“If the proposal is not approved, it is anticipated that the company will remain in administration and, in the event a suitable offer is not received to acquire the business, we will have to consider ceasing its trading activities.”
The struggling retailer operates from 169 stores across the UK, employing around 1,800 staff, and is owned by Turkish entrepreneur Cafer Mahiroglu who bought the business out of administration in 2008.
Select trades as a value women’s fashion retailer, targeting 18-35 year olds, and has an annual turnover of £77m. It posted a £15.5m loss for the 18 months to December 2017.