New Look is attempting to secure zero rent on 68 of its stores as it formally launched a major restructuring plan to safeguard 11,200 jobs.
Earlier this month, the high street retailer confirmed it was undertaking a company voluntary arrangement (CVA) deal to cut its shop rents and debt pile.
It has now said it will field a vote on the CVA on September 15th after sealing a £440 million (€490 million) debt-for-equity swap.
New Look said it has also secured £40 million in new cash to provide it with financial stability to support it for post-Covid trading.
It is asking creditors to back a CVA proposal which would see 402 of its stores move onto turnover-based rents, to support the company as high street footfall gradually returns.
Another 68 of its stores will have “nil rents” for the rest of their lease period, it said.
Nigel Oddy, chief executive officer of the retailer, said the move is “of absolute necessity” and will “relieve financial pressure” on the company after being impacted by store closures during the pandemic.
He said: “Covid-19 has changed the retail environment beyond recognition, accelerating the permanent structural shift in customer spend and behaviour from physical retail to online, which we have seen in recent trading.
“Despite this, we still fundamentally believe the physical store has a significant part to play in the overall retail market and our omnichannel strategy.
“However, the magnitude and speed of the shift in consumer behaviour and confidence nationwide requires a change in the way leases are structured in order to manage uncertainty so that stakeholders share both risk and upside, and to ensure continued business viability.”
Daniel Butters, partner, Deloitte, said: “The retail trading environment in the UK has been under pressure for some time, driven by weaker consumer confidence and competition from online channels.
“Covid-19 has increased these challenges and accelerated the shift in customer spend from physical retail to online.
“The turnover rent model better aligns the risk and reward of trading during these uncertain times and the CVA, together with the wider-balance sheet restructuring, provides a stable platform upon which management’s strategy can be delivered.
“It is important to stress that no stores will close on day one and employees and current suppliers will continue to be paid on time and in full.”