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Monsoon Accessorize in 'critical' financial situation

PUBLISHED: 11:20 20 October 2019 | UPDATED: 11:24 20 October 2019

Accessorize is in a financially 'critical' condition. Pic: Archant library

Accessorize is in a financially 'critical' condition. Pic: Archant library

Archant

High street fashion chain Monsoon Accessorize, with two shops in Norwich, remains in a critical condition despite securing a rescue restructuring deal.

The retailer's future remains in the hands of founder Peter Simon, who committed £30m in loans to support the business following its company voluntary arrangement (CVA) restructuring deal.

Monsoon Accessorize, which has shops on Gentleman's Walk and in Chapelfield, said it believes it can continue using £12m of the owner's loans, but may need to call on Mr Simon for the extra £18m unsecured loan if trading conditions substantially worsen, its latest accounts filed at Companies House, show.

But the company's auditors said that management forecasts show targets are set to be missed in the more pessimistic scenario, meaning access to a further £18m to keep the business afloat may not be available.

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The report, signed by auditors, says covenants "are expected to be breached" but the company claimed this was unlikely.

If that happened, it would be up to Mr Simon to decide whether to hand the money over to the business to continue trading, renegotiate a new loan deal, or let the retailer collapse.

The auditors said the fact that Mr Simon could choose not to hand over the £18m means "there can be no guarantee that funding sources will be available should they be needed".

The company's ability to continue as a "going concern" therefore hangs on its ability to trade using just the £12m loan, or ensure it can access the extra funding, the accounts said.

However, Monsoon Accessorize said it has performed ahead of forecasts for the first month of the new financial year.

The company also delivered positive underlying profits, of £1.2m in the 2018 full-year, and has continued to post positive earnings for the 2019 full-year.

The group said that trading since 2018 has been "extremely difficult" as it battled "depressed consumer spending" in the UK.

Monsoon Accessorize suffered "slower growth in online sales" as like-for-like retail sales continued to decline in the most recent year, it said.

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