New Look, a popular fashion retailer in the UK, is considering a pre-pack administration as an alternative solution to the ongoing rent negotiations with its landlords. The company aims to transition to turnover-based rents, which would provide it with greater flexibility in navigating the challenges posed by the post-Brexit and post-Covid retail environment. In the event that negotiations prove unsuccessful, a pre-pack plan would enable New Look’s current owners to maintain control of the company while also being able to divest themselves of burdensome leases and negotiate new agreements.
Nevertheless, New Look emphasizes its commitment to reaching a consensual agreement with landlords and hopes to foster a collaborative partnership with them during these uncertain times. Many retailers across the UK find themselves locked into rent deals that are no longer sustainable in the evolving retail landscape. These agreements often include clauses for upward-only rent reviews, operating under the assumption that property values and sales will perpetually increase. As a result, turnover-based rent agreements have emerged as a focal point in landlord negotiations, as they better align with the current market conditions.
While the feasibility of the pre-pack option remains to be seen, it has proven successful for other retailers like Monsoon Accessorize and Go Outdoors in addressing their own rent-related challenges. New Look, which currently employs around 12,000 individuals in the UK and Ireland, reportedly chose to withhold rent payments for the first two quarters of this year.