April 12, 2018 / 7:44 AM / in 2 months

UPDATE 1-Britain's Carpetright plans to close 92 stores in restructuring

LONDON, April 12 (Reuters) - Struggling British flooring retailer Carpetright said it would seek creditor approval for a restructuring plan to close 92 stores and reduce rents at 113 of its sites, resulting in about 300 job losses.

Shares in Carpetright, which has in recent months issued a series of profit warnings because of weak UK retail spending and what it calls poorly-located outlets, fell 19 percent to 34 pence in early trading on Thursday.

The company, which trades from 400 shops across Britain, also said it would raise 60 million pounds ($85 million) through a placing and open offer to reduce its indebtedness and fund the restructuring plan.

Many retailers are suffering from brutal trading conditions on the British high street, with Toys R Us UK and electronics retailer Maplin having already been pushed into administration this year, while fashion retailer New Look has also closed stores.

Consumer spending has come under pressure in Britain as inflation has run ahead of wage rises and sentiment is affected by economic uncertainty due to Brexit. Traditional retailers are also battling competition from booming online specialists.

Carpetright said it would seek creditor approval at a meeting on April 26 for a company voluntary arrangement (CVA) process to allow the shop closures and lower rents, before asking shareholders for their backing on April 30.

Carpetright’s chief executive Wilf Walsh said that if the CVA gets a green light, it would help put Carpetright in a position to return to profitability.

“Completion of the CVA and equity financing will enable us to establish an appropriately-sized estate of modernised stores, on economic rents, complemented with a compelling online offer, enabling Carpetright to address the competitive threat from a position of strength,” he said in the statement on Thursday.

Carpetright said that trading had remained difficult since it last updated the market on March 1, and it reiterated its guidance for a small underlying pre-tax loss for the year ended April 28.

Shares in Carpetright have lost 81 percent since the beginning of the year.

Of the 92 store closures, 81 currently trade as Carpetright with the additional 11 already closed but still being leased by Carpetright.

The company said that it would seek to redeploy the staff facing redundancy where possible. It has a total UK workforce of 2,660. ($1 = 0.7046 pounds) (Reporting by Sarah Young; editing by Kate Holton and Adrian Croft)

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