Luminar asks landlords for rent reduction
Luminar, Britain's biggest nightclub group, has approached the majority of its landlords with a request for a significant reduction in rents — as part of a wide-reaching plan to substantially cut costs.
The troubled group, which last week revealed current like-for-like sales declines of almost 20%, is aiming to make £10m of cost savings in the current financial year in the wake of a 78% pre-tax profit slump to £4.4m.
It is understood to have had some initial success in cutting rents — reports suggest that it has asked for a 20% reduction.
The group — operator of brands such as Oceana and Liquid — recently installed a new chief executive, Simon Douglas, who replaced founder Stephen Thomas.
In an interview with The Times' Dominic Walsh — to be published in the forthcoming edition of M&C Report — Douglas said: "We're renegotiating on 60-odd leases. We're in discussions with all our landlords asking them for support in this climate. We've had some positive results."
Asked if the group had intimated to landlords that a pre-pack was possible outcome if not enough landlords complied, Douglas said: "I'd rather negotiate amicably than start threatening pre-packs."
The group has exited some lossmaking and marginal sites. It has returned three to landlords, sold one site and expects to dispose of a further five outlets. The move will leave it with a core group of 78 clubs.
Asked about banking covenants given the current trading environment, Douglas said: "At the moment we're certainly not going to breach but we're in discussions with our banks and weighing up our options. There is a risk we could do if sales and profits worsened.
"If we do renegotiate it will probably cost us money. We passed our last covenant test but there's no escaping the fact that the current climate is tough."
Shares in the group closed today at 18p, leaving it capitalised at £18m, against debts of £92.6m.
