Trouble at Store Twenty One adds to high street woes
A thousand jobs are at risk at the discount fashion retailer Store Twenty One, formerly known as Quality Seconds, which is in talks with its lenders after defaulting on rent payments.
The company struck a rescue deal with creditors last year through a controversial company voluntary arrangement (CVA), but is still struggling as more pain sweeps the high street.
Last week Brantano collapsed into administration, Agent Provocateur was sold in a rescue deal to Mike Ashley and Jones Bootmaker teetered on the brink.
It is believed Store Twenty One is talking to its lender, State Bank of India, to try to prop up the business as tough trading conditions exacerbate its balance sheet woes. It has apparently not yet broken the terms of its CVA, but a quarterly rent date at the end of March could tip it into a precarious position. Landlords outside the arrangement have complained that the store is struggling to meet payments.
The CVA deal last year allowed the retailer to shut 77 shops and persuaded landlords for 17 of its 202 stores to take a 25pc rent cut. Landlords for more than 80 other stores were asked to accept monthly rents rather than quarterly payments.
At the time, the business owed more than £2.6m in tax to HMRC and was being pursued by local authorities over unpaid business rates. Other suppliers were due to receive just 10p in the pound.
The company, which can trace its roots to 1932, was listed on the stock market until 2002 before collapsing into administration in 2006. It was bought out of administration in 2007 by Grabal Alok, an Indian textile manufacturer, which rebranded QS as Store Twenty One. But the financial crisis meant the State Bank of India had to provide financing. It hired AlixPartners last year to restructure its business and if the CVA fails, it is likely the firm will be appointed as administrator.
Store Twenty One’s financial documents reveal it has not made a profit since Grabal Alok took over.