Abokado has admitted that a number of underperforming sites threaten the survival of its business after becoming the latest chain to embark on a company voluntary arrangement (CVA).
The company delivered record profits in its last full financial year, but said that a sales downturn first encountered last autumn has prevailed throughout 2019.
To compound matters, the 23-strong chain revealed that it suffered a “significant sophisticated online banking fraud” in July, which materially impacted working capital and exacerbated its trading issues. “The fraud is subject to investigation by the relevant authorities but the directors consider it unlikely there will be any recovery.”
In a statement given to trade website Propel, the company added: “The directors have undertaken a number of measures across 2019 to improve performance against the prevailing headwinds, comprising further cost reduction and margin improvement plans. While the core Abokado estate continues to trade well, a number of underperforming sites threaten the survival of the whole business.
“The proposed CVA is designed to mitigate and/or remove these factors to underpin the short, medium and long-term viability of Abokado providing the best outcome for our creditors, suppliers, customers and employees. The directors wholeheartedly recommend all stakeholders vote in its favour.”
Chief executive Mark Lilley said the CVA would put Abokado in the best possible position to move forward in an uncertain environment.