BEALES says it is business as usual at its Winchester department store in the Brooks Centre.

The firm signalled financial difficulties and the possibility of store closures by taking steps to get its rent bill cut.

The Bournemouth-based department store chain has proposed a company voluntary arrangement (CVA).

It wants to pay a reduced rent – 30 per cent of its current level – on 14 of its leases, including Winchester, while it negotiates further with landlords.

The reduced rent would be paid for ten months while the company engages with the store’s landlord to agree the basis of any continued trading from this sites.

Beales chairman Stuart Lyons said: “Most of Beales’ stores are profitable, including our flagship stores in Bournemouth and Poole, which are unaffected by the proposal. However, a minority of our stores lose money because leases agreed some years ago are no longer sustainable due to changes in the economy and local conditions.

“These legacy rents have been dragging the group down. This is a unique opportunity to restore the group to financial health.”

CVAs are legally binding agreements with creditors, which can be proposed when a company is experiencing difficulties paying its debts. They are similar to an individual voluntary arrangement (IVA) which gives an individual an alternative to bankruptcy.

A Beales spokesman said of the store in the brooks: "At the moment it is business as usual. we are carrying on exactly as before.

"We are pretty confident (about the CVA) but we don't want to speculate beyond that."

Beales was bought last year by businessman Andrew Perloff, whose company Panther Securities is the landlord at 12 of its stores and is supporting the CVA. Beales says the buying group Associated Independent Stores, its largest supplier, is also supporting the move.

Rob Croxen, restructuring partner at KPMG and proposed ‘supervisor’ of the CVA, said: “Founded in 1881, Beales is a familiar face on the high street of many towns and cities up and down the country. However, in recent years, the profitability of certain stores has been hampered by expensive legacy leases which were agreed many years ago.

“This CVA seeks to strike a balance which provides a fair compromise to the landlords, while allowing the viable part of the business to move forward. It’s particularly important to stress that none of the stores will close on day one, and employees, suppliers and business rates will continue to be paid on time and in full – something which we know from our work on previous CVAs is of critical importance to landlords.”

The company needs to secure at least 75 per cent creditor approval for its CVA.