Carluccio’s — the Italian high street chain founded by the late Antonio Carluccio — has confirmed that it has entered a Company Voluntary Agreement (CVA): an agreement that a distressed business reaches with the people or companies (in Carluccio’s case, this is mainly landlords) it owes monies to and which allows it to keep trading while paying off (some of) its debts. What it means in practice is that the group, which has 103 sites nationwide, is on the verge of closing 34 loss-making sites.
In March, it was reported that the company was seeking a buyout — a story which followed the news that for the year to 25 September 2016 Carluccio’s pre-tax profits fell by 81 percent to just £982,000, despite a revenue rise of 2.7 percent to £140 million. At the time, the company cited “exceptional” costs to explain plummeting profits.
Earlier in the year, Carluccio’s had confirmed the appointment of financial advisors, KPMG, after the appointment of new CEO Mark Jones, but insisted that there were no plans to restructure, despite its predicament appearing very similar to other chains in the market who were struggling. They include Byron, Jamie’s Italian, Strada, and Prezzo — British chains which have all been forced to restructure in the past 12 months. It said that KPMG had been retained to “assess its options” for the future, but representatives denied Carluccio’s was in trouble, saying it was “largely debt-free.”
Now, it says that it will consider “constructive discussions” with landlords in a bid to reach mutually beneficial terms for the future. But the suspicion remains that the company’s creditors will vote (a minimum of 75 percent is required) for the CVA to be approved, which is likely to result in the closure of those 34 threatened sites. The CVA has to be voted on before the end of May.
If the proposals are approved by the landlords, it could also mean that Carluccio’s pays a reduced rate for six months while the company continues to hold talks and assess its medium- and long-term options.
In London, the sites under threat include locations at Westfield London (Hammersmith), Islington, Muswell Hill, and Chiswick according to MCA.