Comet's new owner leans on landlords to reduce rents
OpCapita determined to cut costs at the troubled electrical retailer with some stores to be axed
Sunday 12 February 2012
Comet is pressuring landlords to slash its annual rental bill of £77m just days after the private equity firm OpCapita paid a token £2 for the beleaguered electricals chain.
Property executives at the 248-store retailer have stepped up their demands for monthly rents since the deal was completed in the first week of February, which involved owner Kesa in effect paying OpCapita £50m to take the loss-making chain off its hands.
While such rent requests by struggling retailers are relatively common, it is understood that, as part of its due diligence on the chain, OpCapita has also graded Comet's stores into A, B and C categories.
It is thought that Comet could seek to renegotiate rents on many of its stores. But the retailer has also tested the appetite of landlords to take the least profitable stores off its hands, in addition to earmarking the weakest shops for possible closure when their leases expire.
The electricals retailer's new owner has denied that large-scale store closures are on the cards. A Comet spokesman said: "There are no plans under OpCapita ownership to close stores beyond the handful of stores where Kesa had already taken the decision not to renew the lease".
Nevertheless, the recent activity by Comet's property team is the latest example of the cost-cutting measures that OpCapita is pushing through as it seeks to turn around the chain's fortunes.
Comet suffered a dreadful Christmas, with its like-for-like sales plummeting by 14.5 per cent between 1 November and 8 January. This fall came on the back of a calamitous loss of €25.7m over the half year to 31 October.
On Thursday, Comet told staff of its plans to axe at least 450 repair and support roles. Bob Darke, the retailer's chief executive, said: "The proposal to reduce staff numbers has been a very tough decision to make. But significant savings are required to secure the long-term viability of our business."
The company said the measures were to align it with other electrical retailers by reducing its investment in electrical field repairs "to focus resources more single-mindedly on store operations".
Meanwhile the Korean television giant Samsung has yet to complete a long-term supply agreement with Comet. The issue is thought to relate to the Korean company securing trade credit insurance to supply the retailer.
Comet's rivals have also found the going tough over the past year. The US giant Best Buy exited its 11 UK stores last month. Dixons Retail, which owns Currys and PC World, saw underlying sales in the UK and Ireland fall by 7 per cent for the 12 weeks to 7 January.
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