Austin Reed Mulls Dozens Of Store Closures

Austin Reed, the high street clothing retailer, is examining the closure of dozens of high street stores as part of a restructuring aimed at securing its long-term future.

Sky News has learnt that Austin Reed has begun discussions with landlords about a Company Voluntary Arrangement (CVA), a restructuring mechanism, with the closure of approximately 30 shops said to be under consideration.

As part of a deal, Darius Capital, the principal shareholder in Austin Reed, would be likely to inject fresh capital into the business, property sources said.

People close to the situation insisted that no final decision had been made about whether to proceed with a CVA or how many stores would close.

However, is is understood that a CVA could be launched as soon as next week, with Deloitte, the accountancy firm, reported before Christmas to have been lined up to oversee it.

If Austin Reed does proceed with the plan, it would be the latest retailer to initiate measures to improve the state of its balance sheet.

Last week, Bank Fashion called in administrators just weeks after being sold by JD Sports Fashion to a restructuring specialist.

One landlord consulted on Austin Reed's plans described the process as "consensual", in contrast to many CVAs, which often elicit a hostile reaction from retail property-owners.

CVAs, which require the approval of landlords, can be controversial because they allow business-owners to shed loss-making sites while retaining control of the business.

It was unclear on Wednesday which alternatives to a CVA were being considered by Austin Reed's shareholders.

Companies which have employed CVAs in recent years, with varying degrees of success, include Fitness First, the health and fitness clubs operator, Clinton Cards and JJB Sports.

Austin Reed is run by Nick Hollingworth, its long-standing chief executive, who saw the company through its delisting from the stock market in 2006.

The chain, which specialises in formalwear for men and women, trades from around 230 shops, was founded by Austin Leonard Reed in 1900, with a flagship store opening in 1911 on London's Regent Street.

Austin Reed and Deloitte declined to comment.