Retailer Negotiates with Landlords to Cut Costs Amidst Declining Sales
- WH Smith seeks rent cuts from landlords
- Gerald Eve hired as advisers for negotiations
- Landlords angered by potential CVA threat
- No CVA being pursued, but not ruled out
- 1,500 roles at risk of being cut
- Full-year loss expected between £70m and £75m
- Revenue down 57% in July 2020
- High street revenue down by 25%
WH Smith is seeking rent cuts from its landlords as it looks to cut costs amid the pandemic’s impact on sales and footfall. The retailer has hired advisers Gerald Eve to negotiate with landlords across its portfolio of over 1,000 UK stores. Some landlords are reportedly angered by the move, with one unnamed source claiming WH Smith is using the threat of a potential Company Voluntary Arrangement (CVA) to encourage agreement. However, a WH Smith source told The Times that a CVA was not being pursued or used as a threat. Last week, WH Smith announced it would launch a collective consultation that could see around 1,500 roles cut across the business in an effort to restructure. The company expects a full-year loss of between £70m and £75m due to impacted sales. It had previously predicted total revenue would be down between 80% and 85% from April until August 31, 2020, but sales have made a ‘gradual recovery’ despite remaining materially lower than the previous year. As of July 2020, group revenue declined by 57%, with high street revenue down by 25%. A spokesperson said: ‘Like all retailers, WH Smith has been impacted by Covid-19, and while we have reopened all our 575 High Street stores, footfall remains depressed and it is imperative that our property costs reflect the significant changes on the high street. We are working collaboratively with the vast majority of our landlords and look forward to agreeing terms which are appropriate for today’s retail environment.’
Factuality Level: 8
Factuality Justification: The article provides accurate information about WH Smith’s efforts to negotiate rent cuts from its landlords due to the impact of Covid-19 on their business and includes quotes from a spokesperson for the company. It also mentions the potential job losses and financial loss. However, it does not include any personal opinions or exaggerated reporting.
Noise Level: 3
Noise Justification: The article provides relevant information about WH Smith seeking rent cuts from its landlords due to the impact of the pandemic on their business. It also mentions the potential job losses and the company’s financial situation. However, it could provide more in-depth analysis or insights into the long-term effects of the pandemic on retailers and strategies for recovery.
Financial Relevance: Yes
Financial Markets Impacted: WH Smith’s negotiations with landlords over rent cuts could impact the company’s financial performance and its relationship with landlords.
Financial Rating Justification: The article discusses WH Smith seeking rent cuts from its landlords, which is a financial matter for both the company and the landlords. It also mentions the potential impact on the company’s financial performance due to lower footfall and reduced sales.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no mention of an extreme event in the last 48 hours.
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