THE future of a Hampshire department store is in doubt after the outlet announced it will tell the landlords of its shops that they need to drastically cut its rent or potentially see the company go into administration.

The Bournemouth-based department store chain Beales, which has a shop in Winchester, is proposing a company voluntary arrangement (CVA) to resolve its financial difficulties.

The proposal was due to be put before creditors this morning and shareholders this afternoon and Winchester is one of the stores which Beales says is unviable unless rent can be cut.

The CVA proposal says: “If the CVA is not approved at the relevant meetings, it is very likely that the company and Beale Limited will no longer be able to trade as a going concern, which would result in the appointment of administrators.”

Nigel Beale, honorary president of the company, whose great-grandfather founded Beales in Bournemouth in 1881, said: “I think we’ve all got our fingers crossed because it should put the company back on the right sort of footing.

“We have three particularly onerous leases on extremely high rents and I don’t think it’s any secret that if those particular properties were eliminated, the company would come back into profitability relatively quickly."

Beales wants to pay 30 per cent of the rent due on the shops in question for 10 months, while it renegotiates.

The CVA proposal adds: “Unsecured creditors (including landlords) will receive a greater return on the amount owed to them in the CVA than they would do if the company were to be subject to an administration.”

Seventy-five per cent of creditors need to back the CVA proposal for it to go ahead, as well as 50 per cent of shareholders – although the creditors’ decision would prevail if the two meetings voted differently.

Beales, which has 29 stores across the country, was bought last year for just £1.2million by investor Andrew Perloff. It made pre-tax losses of £4.6m in the year ending November 2014.

The proposal says: “Since taking control in April 2015, the new management team has reduced headquarter and operating costs by more than £1m annualised, negotiated improved terms for suppliers and concessionaires and discontinued loss-making activities, including the non-productive transactional website.

“Product ranges have been reviewed, old stocks cleared and new brands introduced.

"A Back to Beales campaign has been launched in-store and through local media and the appearance of the stores has been enhanced.”

Bournemouth and Poole are not among the stores deemed unviable without a rent cut.

Beales chairman Stuart Lyons said when the CVA proposal was announced earlier this month that "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".

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

Beales only owns the freehold at three stores – Bedford, Kendal and Yeovil, along with a small warehouse in Bolton. It leases property adjoining all three of those stores.

All its other shops are leased, including the Bournemouth flagship, where the landlord recently submitted an application to turn the top four floors into 76 flats.

The “category two” sites which the company says are unviable unless rents can be slashed are: Abington, Bishop Auckland, Bolton Pad House, Bolton, Hexham, Keighley, King’s Lynn, Redcar, Rochdale, Rochdale Pioneer House, Saffron Walden, Winchester, Yeovil (Warehouse) and Yeovil (Wallis Store).