Fri. Nov 27th, 2020

Clinton Cards In Trouble Again

Britain’s second-largest independent greeting cards chain is preparing to join the army of retailers which have taken a contentious route to slashing rents and closing shops.

Sky News has learnt that Clintons wrote to landlords on Friday to invite them to a series of “town-hall” meetings to discuss a possible Company Voluntary Arrangement (CVA).

The discussions, which will take place next week, will raise the prospect of Clintons axing dozens of its 330 UK stores during the coming months.

A specific number of shops that might be affected has yet to be decided and will depend on the outcome of the negotiations with landlords, according to insiders.

KPMG, the accountancy firm which has overseen a substantial number of retail CVAs in recent years, including at Mothercare and Paperchase, has been lined up to work on the proposals.

News of the prospective CVA comes weeks after Clintons initiated a sale process, which attracted interest from a number of parties.

A number of restructuring or financing options remain on the table, with Clintons’ management – led by chief executive Eddie Shepherd – understood to be keen to keep as many stores open as possible.

The plans make the greeting cards chain the latest in a deluge of big high street chains which have resorted to drastic measures to give them a chance of survival.

This year alone, Debenhams, Jack Wills and Sir Philip Green’s Arcadia empire have either turned to CVAs or fallen into administration as they have grappled with brutal trading conditions and rising fixed costs.

The calamitous state of the high street has prompted desperate pleas for help from retailers, with a committee of MPs concluding this week that the business rates system needs an urgent overhaul.

Figures compiled by PricewaterhouseCoopers showed recently that shop closures reached their fastest rate in nearly a decade during the first half of this year, with an average of 16 shutting every day.

Clintons’ latest restructuring proposal comes seven years after it collapsed into administration.

Owned by the Weiss family, which previously controlled the American Greetings retail business, Clintons employs about 2,500 people.

The chain is the second-biggest specialist card retailer in Britain behind Card Factory.

Property industry sources said that British Land, the FTSE-100 landlord, was the most-exposed group to Clintons, with about a dozen stores.

Other players such as Intu Properties and Hammerson also own small numbers of Clintons’ shops.

Under the leadership of Eddie Shepherd since 2017, Clintons’ financial performance has seen an improvement, with losses falling last year from the £14m it recorded in the year to February 2018.

Roughly 70 loss-making Clintons stores have already been closed over the last five years.

The Weiss family sold a 60% stake of American Greetings last year to Clayton Dubilier & Rice, the buyout firm.

Family members continue to own 40% of American Greetings, which is the second-largest cards chain in the US, behind Hallmark.

They took control of the British chain in 2012 when they bought its bank debt from lenders and immediately forced it into administration.

In an effort to manage costs more prudently, its head office has been relocated above its store in Loughton, Essex.

Clintons has sought to expand its non-cards business in recent years in a bid to compete more effectively with rivals.

The growth of online card retailers, many of which offer a bespoke and rapid service, has hurt high street retailers of a product that is also widely sold in supermarkets.

Clintons and KPMG declined to comment.

credits: Sky News

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