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Jobs at risk as Carpetright plans closures of poor performing stores

The firm is to close under-performing stores. Credit: PA

Troubled retailer Carpetright has announced plans to close poorly performing stores in restructuring plans that will see it tap investors for up to £60 million.

The group said it was "exploring" a Company Voluntary Arrangement (CVA) to help shore up its financial position.

The move would allow the company to close loss-making shops and secure discounts on rental costs.

If the CVA goes ahead, Carpetright would push through an equity issue of between £40 million and £60 million to fund plans to reboot the business and drive down debt.

The group, which has 409 UK shops, also agreed a £12.5 million unsecured loan from major shareholder Meditor to help with "short-term working capital requirements".

Carpetright chief executive Wilf Walsh said it would be 'business as usual' over Easter. Credit: PA

Carpetright chief executive Wilf Walsh said it would be "business as usual" for stores over Easter and the firm would remain in "close contact" with staff over its restructuring plans.

He said: "I am pleased that we have secured this additional support from one of our major shareholders as we continue to explore the feasibility of a CVA and a conditional equity issue.

"These further cash resources will enable us to make the necessary decisions free from short-term funding pressure.

"The aggressive store opening strategy pursued by the company's previous leadership has left Carpetright burdened with an oversized property estate consisting of too many poorly located stores on rents which are simply unsustainable."

Carpetright's announcement marked another dark day for Britain's beleaguered high street.

Other large retailers in recent months have reported disappointing profits and financial difficulties:

  • Toys R Us announced the closure of all of its stores leading to 3,000 job losses.
  • New Look announced plans to axe almost 1,000 jobs and close 60 stores
  • Maplin collapsed putting 2,500 jobs at risk
  • Debenhams announced the review of 21 warehouses and stores that could put 220 jobs in jeopardy
  • Mothercare and Moss Bros issued profit warnings after a slump in sales.