Nine loss-making Austin Reed stores will close as part of the restructure

Nine loss-making Austin Reed stores will close as part of the restructure

UK clothing retailer Austin Reed Group is to shutter 31 stores and receive a GBP3m (US$4.5m) cash injection from shareholders as part of a company voluntary arrangement (CVA) to try to return the business to profitability.

The owner of the Austin Reed, CC and Viyella brands said the proposals are designed to maximise the group's opportunities against the backdrop of a rapidly changing retail environment and the uncertain economic climate.

As part of the CVA overseen by Deloitte, 22 CC and nine Austin Reed stores will close, while 35 underperforming stores are expected to remain part of the business but will be subject to a 20% rent reduction for 12 months.

The retailer's 166 remaining stores, including the Austin Reed flagship on Regent Street, London, will be unaffected under the CVA, it said.

"The actions that we are taking will ensure a long-term sustainable future for the brands in the group, and will provide a solid financial platform from which to operate and grow the business," said Austin Reed Group chief executive Nick Hollingworth. "The decision to close some stores was not taken lightly but we cannot continue to operate those within our portfolio that are loss-making."

Neville Kahn of Deloitte, meanwhile, described the CVA as "fair and in the best interests of all stakeholders," adding that it provides "an ongoing future for the business" and early indications show the support of creditors.

The news comes less than two months after the company confirmed it was working on a strategic review to "maximise the opportunities" for its businesses.

According to Companies House filings, Austin Reed Group's loss widened to GBP141,598 (US$221,480) in the year to 31 January, compared to a loss of GBP53,888 in the same period of the year before. Turnover climbed 1.7% to GBP47.7m from GBP46.9m in the prior year.