Earlier today Retail Gazette quoted that CVAs have resulted in almost 1000 store closures since 2017, with the numbers of CVAs doubling in that period. Last week's Arcadia CVA will see the immediate closure of 23 of its stores and rent cuts of up to 50 per cent on almost 200 other shops. Monsoon Accessorize is expected to launch its CVA this week - they currently operate from around 270 stores across the UK.
Business rates have long been identified as a major reason why retailers are struggling. What has not been publicised much in relation to the recent CVAs though - and thanks to John Webber at Colliers for bringing this to light - is the significant "business rates holiday" that Arcadia's CVA has managed to achieve, which apparently is in the region of 30% of its business rates obligations for the rest of the current rating year.
Interestingly, Colliers believe that this would not have been necessary if the tax rate multiplier was 30p-35p as originally set. The tax rate currently stands at an unsustainable 50p.
Arcadia’s CVA has followed a precedent set out by Debenhams three weeks ago, where that troubled retailer had to virtually half its rates bill for this billing year through its CVA. It now looks like other retailers are being forced to follow suit.