British lingerie retailer Ann Summers has threatened its landlords with store closures if they don't agree to rent cuts
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- Lingerie and sex toy retailer Ann Summers may have to close unprofitable stores and reduce its rents following unsucessful negotiations with some of its landlords.
- Boss Jackie Gold said that some landlords "continue to bury their heads in the sand" and refuse to restructure rental agreements.
- The lingerie retailer lost $21.34 million in the year to June 2019, but Gold is optimistic about results in 2020 after lingerie sales rose during lockdown.
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Lingerie and sex toy retailer Ann Summers has said it may be forced to restructure its rental agreements and close stores, amid disputes with its landlords and rising losses.
Chief Executive Jackie Gold said that the retailer had asked landlords to base its rent on turnover after losses increased more than fivefold in the year to June 2019, but some refused. As a result, it may be forced to close unprofitable stores and reduce its rents through a Company Voluntary Agreement (CVA), she said.
CVAs allow insolvent companies to pay debts to creditors over a fixed period, improving their cash flow.
Writing for Retail Week, Gold said that while many landlords of the company's 90 UK stores have been open to negotiations, "some continue to bury their heads in the sand." If the company doesn't can't reach an agreement with landlords, "the only way a retailer is able to resolve the situation is to undertake a CVA," Gold added.
Gold said UK landlords should take a "more pragmatic approach to rents" from now on, pointing to the fact that business rates, a commercial property tax that was suspended after COVID-19 hit, will be reintroduced in spring 2021.
Ann Summers' losses increased more than fivefold from £3 million ($4 million) to £16 million ($21.34 million) in the year to June 2019, which Gold described as the company's "toughest year." She wrote that her family has invested heavily in the company and will continue to do so – "but there is no point doing that just to subsidise those landlords who continue to cling on to outdated terms," she added.
Gold hopes that recent changes in leadership, IT, product quality, pricing and marketing will bring a "significant improvement" on the company's 2019 losses in the next set of results. The erotica, lingerie, and sex-toy industries have seen sales rise sharply over lockdown. Demand for self-love toys in the UK rose by 126% in April compared to the same period last year, Love the Sales said in a report shared with Business Insider, and Ann Summers reported a 44% year-on-year increase in demand for premium lingerie.
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