Struggling menswear chain Moss Bros launches CVA proposal

Menswear retailer Moss Bros has launched a company voluntary arrangement (CVA) proposal as it battles the high street downturn worsened by the coronavirus pandemic.

The troubled company said it was in a “particularly challenged sub-sector of the market” as men’s apparel, and formalwear in particular, has been one of the hardest hit areas of the retail sector.

This was down to the cancellation of events such as weddings, school proms and occasions including Royal Ascot, it said.

Moss Boss, which operates from 128 retail stores and employs approximately 800 staff, said it was launching the CVA to restructure its fixed cost base, “giving it the best chance possible of emerging from lockdown in a manner which secures the long term future of the business.”

A CVA is a formal agreement between a business and its creditors which gives firms the chance of recovery.

It sets out how repayments of company debts should be made to creditors and can deliver a better outcome than an administration or liquidation. After 14 days creditors are asked to vote and at least 75% must agree.

The retailer has hired auditing firm KPMG to advise on the process.

Brain Brick, chief executive of Moss Bros, said: “At the outset of the pandemic, we managed to reduce costs and furlough staff in order to survive the first lockdown. There was then a glimmer of hope as we began to re-open some stores in the summer period, but even then trading was severely impacted, footfall was extremely low and sales were substantially down on the previous year.”

“With the introduction of further lockdown measures, and with the outlook for trading remaining depressed, the Group now faces no alternative but to try and limit our fixed costs and we have therefore made the tough but essential decision to undertake a CVA in order to protect the future of our business and people,” he said.

CVAs have become increasingly popular over the last few years as Britain’s high street suffers from declining footfall, increased business rates and the rise of online shopping. The coronavirus pandemic has only heightened the issues retailers are facing.

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Earlier this year the British Property Federation (BPF) warned that retailers are “weaponising” CVAs as part of a bid to cut costs. It said that the restructuring technique is being abused and landlords are suffering as a result.

BPF boss Melanie Leech said: “We support a rescue culture, but CVAs are being weaponised.

“Rather than as part of a sustainable rescue plan for those in genuine distress, they’re becoming a boardroom negotiating tactic for solvent businesses to rip up leases freely agreed with property owners.

“The process is discriminating against property owners, allowing non-affected creditors to vote on a CVA, yet forcing property owners to absorb the lion’s share of the burden.”

Founded in 1851, Moss Bros has a long and distinguished heritage. It commenced trading in the West End in London supplying costumes to theatres and developed into a formal hire business in 1897.

It also supplied uniforms to the British Army in World War I, secured franchise agreements with Hugo Boss and Canali in the 80s and introduced ‘Tailor Me’, a made to measure personalisation suiting service in the 2000s.

The fashion chain was acquired by the owner of Crew Clothing, Brigadier Acquisition Company, for £22.6m ($30.2m) on 12 March – taking the company private.

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