Magnet Group has today announced proposals for a Company Voluntary Arrangement (CVA) to "address historic property costs, strengthen the business and support its return to sustainable profitability".
The proposed CVA is focused on Magnet’s store estate and will allow the business to work with creditors, including landlords, to address property costs that it says are no longer sustainable.
The proposal includes the closure of 15 underperforming Magnet stores. The majority of Magnet’s 159 stores are not impacted by the proposed changes and will continue operating as normal.
The proposals, which will be overseen by Natasha Harbinson, Will Wright and Chris Pole from Interpath, are subject to creditor approval. If approved, the CVA will enable Magnet to address its property costs "in a controlled and structured way, creating a more robust and sustainable business for the future".
Magnet says staff members impacted by the proposals will be supported throughout and suitable alternative roles within the business will be offered wherever possible, and that today’s announcement will not impact customers – customer orders remain a priority: "Where a proposed closure affects a customer’s local store, their order will be transferred to their closest alternative Magnet store so they can continue to be supported through their kitchen journey."
The group says its has taken a number of steps to improve performance over the last few years, including reviewing its store estate, opening new stores through its small store format, closing sites where needed and continuing to adapt the way the business operates – but adds that while those actions have helped strengthen performance, parts of the group’s historic property footprint and cost base continue to put pressure on the business and its route back to sustainable profitability.
Sophie Rose, CEO of Magnet Group, says: “This is a difficult decision and not one we have taken lightly, particularly where colleagues may be impacted.
“But taking this action now is the right thing to do for the long-term health of Magnet Group. It allows us to deal with property costs that are no longer sustainable and protect the stronger parts of our estate.
“We have a strong brand, talented teams, successful customer relationships and a long-established manufacturing base that will continue to underpin the business for years to come. By removing costs that are holding us back, we can focus more of our time, energy and investment on the areas where we see the greatest opportunity.
“I am confident these proposals will help Magnet Group build a stronger, more resilient business that is better placed to serve customers, support partners and return to sustainable profitability.”
