Savers, the 237-store discount health and beauty chain, has asked landlords to agree to a radical overhaul of its property payments, in an effort to safeguard its future.
The loss-making retailer, which is the stablemate of Superdrug, the AS Watson UK-owned health and beauty chain, has asked landlords for significant concessions, notably a 20 per cent rent reduction and a 12-month rent free – or a half rent – package to be spread over two years.
Savers has also said it wants to place a number of its stores into a shell company that will be guaranteed by Superdrug, to try to improve the investment value of those properties and guarantee rental income. Savers warned that those stores that are not transferred will be left in the existing company, which has substantial losses.
However, the property sector is becoming nervous that Savers could be heading for a financial crunch. The retailer faces fierce competition from the big grocers and the discount retailer Poundland.
In its latest accounts filed at Compan-ies House, Savers Health and Beauty delivered a pre-tax loss of £45.9m for the year to 29 December 2007, compared with a loss of £16.5m the year before. In 2007, Savers posted total sales sharply down to £180.3m from £316.3m – reflecting a sharp reduction in its number of stores to 241 from 424 in 2006. A large number of Savers stores have been converted into Superdrug, which has long been considered the stronger chain.
"Savers can confirm that as a prudent part of our strategy to return the chain to profitability we have written to a number of landlords with regard to negotiating more favourable rent and rate terms in the current economic climate," a spokeswoman for AS Watson said: