Drumchapel Carpetright to close doors as company cuts costs

Carpetright chief executive Wilf Walsh said there was a'burden of a legacy UK property estate consisting of too many poorly located stores on unsustainable rents

From 400-plus United Kingdom stores, chief executive officer (CEO) Wilf Walsh has identified a whopping 205 sites 'that are underperforming and/or on unfavourable lease terms, or, in certain cases, not expected to have significant strategic value to the company going forward'.

Carpetright said that trading had remained hard since it last updated the market on March 1, and it reiterated its guidance for a small underlying pre-tax loss for the year ended April 28.

The move places about 300 jobs at risk although Carpetright, which employs approximately 2,700 workers, said efforts would be made to redeploy affected staff at other stores.

The Banbury store, at Banbury Cross Retail Park, is to remain open.

It will also be asking landlords for rent reductions of up to 50% on 113 more sites under a company voluntary arrangement, a process created to stave off insolvency and which must be approved by its creditors.

The group - which employs almost 2,700 staff in total - also confirmed an investor cash-call to raise around £60 million through a rights issue to put the company on a firmer financial footing.

The carpet and bed provider today announced it would be closing a quarter of its shops as part of a plan to restore profitability.

"Planned closures will not affect our customers, all orders will be fulfilled either by the original store or a neighbouring Carpetright where necessary".

The group has also revealed a "technical breach" of its banking arrangements.

Carpetright is axing 81 stores - and one of them is in York.

Carpetright will have a meeting with its creditors on 26 April, where it will seek approval.

The company said that it would seek to redeploy the staff facing redundancy where possible.

The company's chief executive Wilf Walsh said the "tough but necessary" restructuring would allow the company to address the issue of unsustainable rents in poorly located stores.

We will remain in close contact with all colleagues to keep them fully informed as we move through this process.

The firm said the CVA would help it to "address the competitive threat from a position of strength".

However, bosses say action is being taken to address this issue.

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