The embattled retail industry faces 200,000 job cuts in 2021 after 320 shops closed every week in 2020 in the worst year for the High Street in a quarter of a century.
Retailers are expecting a cash flow crisis while fighting high rent payments despite being shut due to the coronavirus still ripping across the country.
Experts have also said a further shift to online shopping this year is expected to be ‘hugely damaging’ for physical stores.
It comes after a staggering 180,000 jobs in the retail sector – 320 stores a week – were axed last year, leaping by a quarter on 2019.
The huge figure is the worst for the British High Street – which was already struggling due to customers moving online – in 25 years.
Even the world-renown Oxford Street in central London is struggling as popular brands ditch their stores as footfall plummets.
Businesses such as Debenhams, Topshop, Nike and Vans are among the designers either closing or selling their shops on the road.
Meanwhile retail giant John Lewis has moved a step closer in its plans to convert a large chunk of its shop there into offices.
And Arcadia administrators are set to permanently shut another 31 of the fashion group’s stores by the end of January, with the loss of 714 more jobs.
Retailers are expecting a cash flow crisis while fighting high rent payments despite being shut due to the coronavirus still ripping across the country. Pictured: London yesterday
Even the world-renown Oxford Street in central London is struggling as popular brands ditch their stores as footfall plummets. Pictured: London yesterday
It comes after a staggering 180,000 jobs in the retail sector – 320 stores a week – were axed last year, leaping by a quarter on 2019. The huge figure is the worst for the British High Street – which was already struggling due to customers moving online – in 25 years. Pictured: The US Embassy in London yesterday
Bank of England governor says UK economy will recover strongly as vaccinations continue
Bank of England Governor Andrew Bailey said on Wednesday he expected Britain’s economy would recover strongly as the country moves ahead with vaccinating its population against COVID-19.
‘I really do think that we are going to see a pronounced recovery in the economy as the vaccination programme, as it is doing now, rolls out,’ Bailey said.
Britain has suffered the highest death roll in Europe from COVID-19 and its economy shrank by the most among the world’s industrial powerhouses during the first half of 2020.
But Britain has also now vaccinated more people against COVID-19 than almost any other country, raising hopes of a recovery once the government begins to ease restrictions.
Bailey’s comments in a BoE online event for the public came a day after the central bank’s Chief Economist Andy Haldane said he expected the economy to begin to recover ‘at a rate of knots’ from the second quarter.
The BoE is due to publish new growth forecasts on Feb. 4 alongside a report on the feasibility of cutting interest rates below zero to boost growth, as has been done already in the euro zone and Japan.
Bailey again played down expectations that the central bank would make a swift move on this issue.
‘We have not taken any decision, in fact we’ve not actually discussed whether or not to introduce negative rates,’ Bailey said. International evidence to date suggested negative interest rates were only effective in specific circumstances, he added.
When rates were close to zero, and in particular when they were negative, the ability of monetary policy to influence the economy was much less clear. ‘We do not know, with any confidence, how that would work,’ Bailey said.
Most economists polled by Reuters expect the BoE to leave rates steady at 0.1% until 2024.
Bailey said the impact of lockdowns on Britain’s economy seemed to be diminishing, but the current one would still deliver a big blow.
The share of retail sales that had moved online rose sharply in 2020 as consumers and businesses adjusted to social distancing rules, he said.
‘We’re expecting however, obviously, quite a pronounced effect in the first quarter because this lockdown is obviously again necessarily a severe one,’ Bailey said.
Director at the Centre for Retail Research Professor Joshua Bamfield said the forecast 200,000 jobs lost this year were down to firms being shut and rent arrears.
He it was ’the cumulative effects of months of closure and its impact upon cash flow and rent arrears that will be payable when the moratorium ends.
‘Whilst the longer-term effects of the greater use by shoppers of all kinds of online retailing is likely to be hugely damaging for physical stores.’
Lockdowns and restrictions during the pandemic are said to have ‘turbocharged’ the decline in sales in shops which have only been open for short periods in the summer and at Christmas.
Some experts have hinted that the inevitable move towards online shopping has been accelerated by as much as five to ten years.
Last year every week about 3,400 jobs in the retail sector were slashed as stores closed and others tried to stay afloat by laying off staff. There are around three million still employed in the industry.
Shops were forced to spend big to revamp their stores to make them Covid safe, with one way systems brought in as well as plastic screens, quarantining return items and stringent cleaning regimes.
Costs spiralled for smaller stores when they were already losing money due to fewer customers taking to the high Street.
But in a glimmer of hope for independent businesses, more people are shopping locally while they work from home as restrictions mean they cannot get to larger retail parks.
Smaller districts have weathered better against the storm caused by the lockdowns than big cities and shopping centres across the country.
This is best shown with the mass exodus from central London’s Oxford Street, where famous brands are trying to leave due sky-high business rates and fewer customers.
Debenhams, Topshop, Nike and Vans are among the popular labels making an exit while HMW and Forever 21 have both been empty for months.
It is a pattern reflected along the street as 24 out of the 264 units available on the street - 9.1 per cent - are standing empty, according to Local Data Company.
CWM Retail Property Advisors suggest another factor to consider is that some of the stores that are being used are for shops selling ‘tourist tat’, sweets and bureau de change.
Equity Partner Jonathan De Mello told Retail Week: ‘There are still some good brands and retailers with stores on Oxford Street.
‘But the majority of those have tended to congregate around the tube stations – Oxford Circus, Tottenham Court Road and so on. Those bits in between have mostly been taken over by tourist tat.’
Retail giant John Lewis moved a step closer in its plans to convert a large chunk of its famous Oxford Street store into offices in October.
Nearly half of the firm’s flagship store on could be turned into office space as the embattled department store chain tries to stem its losses and return to profit.
Businesses such as Debenhams, Topshop, Nike and Vans are among the designers either closing or selling their shops on Oxford Street (pictured, London on January 14)
A pigeon sits on the empty concourse at Westminster underground station in London during England’s third national lockdown on January 14
A statue of Mary Poppins in an empty Leicester Square in London, during England’s third national lockdown to curb the spread of coronavirus on January 14
General view of an empty street outside the Prince Charles cinema in central London on January 14
The John Lewis Partnership, which runs the department store chain and the Waitrose grocery arm, secured conditional planning permission from Westminster City Council in October.
The move is yet another blow to the already bruised British High Street – which was struggling before the pandemic and has since seen huge falls in footfall.
Last year, John Lewis announced plans to become a major landlord, by converting stores or parts of them into houses.
The retailer, which is already struggling in a rapidly evolving retail environment, has been hard hit by the pandemic and announced earlier this month it wants to save £300million each year by 2022.
It suffered a £635million pre-tax loss for the first six months to July following a £470million write down on its stores.
The John Lewis Partnership says it wants to streamline its head office and operations, but expand into the property market, as part of a new five year growth strategy.
Bosses aim to triple the company’s annual savings from £100million to £300million each year by 2022 – a move which they hope, combined with growth, will push profits to £400million by 2025.
The announcement – made in September – came after the group revealed plans to shut eight John Lewis stores, with the loss of 1,300 jobs. It also announced closure of four Waitrose, which will see 124 jobs axed.
The John Lewis Partnership, which runs the department store chain and the Waitrose grocery arm, secured conditional planning permission from Westminster City Council last night
The unanimous decision by the council’s planning sub-committee, made on the basis of exceptional circumstances, could see up to 45 per cent, or 28,135 square metres, of the flagship shop floor converted to offices
The basement, ground and lower two floors will remain as retail areas, while the floors three to eight will be turned into office space
The ground floor, where customers traditionally enter, will stay the same and will remain retail, though an area towards the north west will be used to access the office space
One of the floors, shown here in the plan, the fourth floor, will be one of the areas converted from retail space into new office space
Boom in pet ownership sees Pets at Home notch surge in retail sales
The boom in pet ownership amid the pandemic has helped Pets at Home notch up a 17.5 per cent surge in retail sales in its festive quarter. The group said like-for-like sales accelerated further in December, growing by 19.3 per cent.
It comes after the retailer hiked its profit outlook earlier this month on the back of strong trading, revealing it now expects to deliver at least £77 million in underlying pre-tax profits for the full-year to March.
The chain has been boosted by a surge in demand for pets among Britons since the start of the coronavirus crisis while its essential status has allowed its stores to remain open throughout lockdowns.
But alongside planned cuts, the group also announced a number of investment plans, including proposals to expand into the property business – an idea already explored by furniture giant IKEA.
The company had said it is pushing forward with plans to expand into housing, highlighting that it has identified 20 potential sites which could be used for private housing.
The sites had not been made public, but the company said the new homes could be built above or beside stores or on other land it owns.
This includes freehold stores, a 2,800-acre farm in Hertfordshire, another farm in Leckford, Hampshire, four hotels and various logistics facilities.
Meanwhile Arcadia administrators are set to permanently shut another 31 of the fashion group’s stores by the end of January, with the loss of 714 more jobs.
Sir Philip Green’s Arcadia retail empire collapsed into administration at the start of December.
Arcadia, which once consisted of 444 UK retail chain stores including Topshop, Miss Selfridge, Dorothy Perkins, and Wallis, is the latest leading high street company that has been battered by the pandemic.
It is understood that the latest set of cuts, first reported by The Times, will result in the closure of all 21 of the group’s Outfit stores.
Arcadia administrators are set to permanently shut another 31 stores by the end of January. Pictured: Topshop flagship store in Oxford Street, London, which is reportedly up for sale
It is understood the latest cuts will result in the closure of all 21 of the group’s Outfit stores
Debenhams will shut flagship Oxford Street store as the wind down of historic chain continues
Mattress retailer sees sales surge by a fifth as it moves to online shopping
Online mattress retailer Eve Sleep has seen sales surge by nearly a fifth amid the switch to internet shopping, but warned that supply problems may affect growth.
The firm posted an 18 per cent jump in sales over the second half of 2020, which left group revenues 6% higher over the year and helped narrow underlying annual losses to £2 million from £10.7 million in 2019.
But it has been hit recently by industry-wide supply issues due to a global chemical shortage and rising cost pressures of raw materials, which it said may be a ‘potential limiting factor on near-term growth’.
It was forced to increase its prices in November due to the cost pressures, though it said this had not hit sales.
The group cheered record trading over Black Friday and the first week of the Boxing Day sales as it continued to benefit from the shift online amid the pandemic.
But shares plunged 13 per cent amid the warning over future growth levels, as well as a bout of profit-taking after recent impressive gains.
Eve added that while it has not seen any cost or duty increases since Brexit, there has been some ‘slowing of pace’ of deliveries to Ireland and Northern Ireland due to widespread courier disruption after the year-end transition.
‘Eve will continue to closely monitor the situation but does not expect any material full-year impact at this time,’ the firm said.
Chief executive Cheryl Calverley said: ‘We have exceeded our financial expectations for 2020, which were raised twice during the year, extended our product ranges, opened new sales channels, increased brand awareness, presence and recognition, with the winning of the Which? awards, and improved the strength and resilience of our technology, logistics and operations platforms.’
The group will focus on investing in France over the year ahead following a restructuring of the division and launch of a new French website.
‘In 2021 we will invest in growth initiatives across our business, particularly in France, where we see good opportunities to scale, whilst continuing to build on the current UK momentum,’ added Ms Calverley.
Outfit, which was acquired by Arcadia from Sears in 1999, is not a fashion brand itself but sells all of Arcadia’s retail brands in out-of-town destinations for shoppers.
It comes after reports that Topshop’s flagship store in Oxford Street, London, is set to be sold by administrators. The three-storey building opened in 1994 and had its own DJ booth and nail bar.
Reports suggest property adviser Eastdil has been appointed to oversee the sale of the building, while Savills would advise on future leasing options.
Arcadia and Deloitte declined to comment on the closure update.
The move comes a day after the deadline for rescue bids set by administrators at Deloitte.
High street stalwart Next is among retail groups to have placed bids to take control of the retail empire.
Deloitte are expected to receive bids worth more than £200 million in the process, which could be completed by the end of the month.
Next has been touted as one of the most likely victors in the process, with the listed retailer bidding for the group in partnership with US hedge fund Davidson Kempner.
It faces competition from high street rival JD Sports, which has held talks over a joint bid with US retail giant Authentic Brands.
Last month, administrators agreed the sale of Arcadia’s plus-sized brand Evans to Australian firm City Chic Collective in a £23 million deal.
According to the Times, expressions of interest have valued Topshop at more than £200 million, leading Primark’s owner, Associated British Foods, to walk away from the sale.
It comes days after Debenham’s announced it will close its flagship store in Oxford Street, London, as liquidation of the retail giant continues.
The department store closures will result in the loss of around 320 jobs, with stores in Portsmouth, Staines, Harrogate, Weymouth and Worcester closing their doors for good.
The company started a liquidation process last month after failing to secure a last-minute rescue sale.
The chain’s remaining 139 shops are currently trying to sell off all their stock – a process made harder by the current national lockdown.
Debenhams had been in administration since April, but when any hopes of a rescue were dashed, it drew a line under 242 years of trading and put 12,000 jobs at risk.
Experts called the collapse of the two giants at the end of last year one of the most ‘devastating’ weeks in the history of British retail.
Up to 25,000 workers were put at risk of redundancy in the space of 12 hours.
The number of job losses was so large it equated to losing the entire labour force of the UK fishing industry overnight.
It came in addition to thousands of other job losses as a result of the pandemic, which has pushed businesses across all sectors to breaking point.
Peacocks and Jaeger, which are owned by the Edinburgh Woollen Mill Group, fell into administration last month, putting 21,000 jobs at risk.
Laura Ashley went bust in March while fashion giants Oasis and Warehouse fell into administration in April.
Which stores have gone bust during the pandemic? Debenhams, Peacocks and D W Sports among the big beasts to go under amid the coronavirus crisis
- Bonmarché, the value-oriented clothing retailer, went into administration for the second time in a year on 2 December 2020.
There are 226 stores and more than 1200 employees. It is owned as a separate business by Philip Day, whose EWM is also in crisis (see below).
Philip Day put this company into administration a few months ago, and reaquired it via a pre-pack. It is thought unlikely that he will do this again a second time.
- Age UK, the charity focused on supporting the elderly, closed 133 of its 392 charity outlets in 2020 and made 400 people redundant. During the Lockdown 1 approximately 70% of its staff were on furlough.
- Debenhams, the oldest retail chain in the UK, announced on 1 December 2020 that it had no alternative except to go into lquidation.
The company has gone into administration twice in the past two years and, with the failure of Arcadia (see next item), whose concessions took up a large proportion of Debenhams’ sales area, the Company’s future looks very bleak. It is expected that all stores will trade until Christmas, after which the contents of every store will all be sold off, its staff made redundant and the premises vacated or transferred to new owners if other companies acquire some or all of the estate.
The Debenhams’ name goes back to 1778, when William Clark established a drapery store at 44 Wigmore Street. It became Clark and Debenham in 1813, when Wm Debenham invested in the firm. The first store outside London was opened in Cheltenham in 1818. It became Debenham & Freebody in 1851.
In 1919 it took over Marshall & Snelgrove, another department store chain, and bought Harvey Nicholas in 1920. In 1985 it was acquired by the Burton Group (later renamed Arcadia), was de-merged in 1998, acquired by private-equity consortium Baroness Retail in 2003 and become a public company again in 2006. Private equity funds in the form of TPG, CVC Capital and Merrill Lynch paid themselves £1.2bn in dividends as a reward for owning the business for only three years and increasing its debt from £100m to £1,000m.
A sale and lease-back of 23 stores raised almost £495m for the temporary owners and saddled the business with long-term leases of up to 35 years.
In the past 35 years it has had a variety of owners none of which was fundamentally committed to the future of Debenhams Group or was able to introduce a coherent long-term strategy. Debenhams has not been the only retail victim this year of this approach.
- Arcadia, the fashion giant owned by Philip Green’s wife in Monaco, went into adminstration on the last day of November 2020. It consists of the former Burton Group, with major subsidiaries Topshop, Dorothy Perkins, Burtons, Miss Selfridge, Wallis and Evans.
These are all well-known brands. The administrators are allowing the stores and the website to continue to trade while new purchasers for the business(es) are found. There are around 440 stores and perhaps 12,000+ staff.
The heyday of Philip Green’s Arcadia was probably 2004-2007, but it failed to invest sufficiently in shops, IT or modern designs. Its dinner has been eated by upstarts like Primark, BooHoo, Zara, Next and even by grocery clothing lines.
For some years, the company has lacked a clear sense of direction and suffered from low investment and an unwillingness to develop its online sales. It has cut its store numbers by more than half since 2012. Comparatively staid business like John Lewis and Next have heavily invested in their online operations and now produce half their sales online.
So this could have worked for Arcadia, if it had been attempted. Large amounts have been taken out of the business in the form of dividend payments.
More public interest has been generated by the Greens’ luxury cruisers than by any innovation in Arcadia’s shops. There is anxiety about whether the pension assets of the Arcadia Group are sufficient to pay pensions for its past and current employees.
Administration means that debts owed by Arcadia to landlords and suppliers will probably be repaid at perhaps only 1%-2% of what is owed. Apart from the effect of the Arcadia crash on its own shops and employees, its failure will be a hammer blow for many suppliers and property owners.
It has already caused JD Sports to pull of out its acquisition discussions with the Debenhams Department Store chain, because so much of Debenhams’ floor space is given over to Arcadia concessions many of which may not survive after Christmas. An offer by Mike Ashley of a lifeline to keep Arcadia as a going concern was rejected.
Arcadia would probably have been in trouble at some time in 2021-22, but the impact of the coronavirus pandemic and the closure of non-essential stores in Lockdown 1.0 and Lockdown 2.0 have become a death sentence for this group of businesses, giving it no chance to recover or adopt more successful strategies.
- Peacocks and Jaeger, both clothing businesses owned by EWM, were put into administration in mid-November after negotiations with possible suitors came to nothing.
Discussions on behalf of both companies continue. Jaeger’s business is more formal: it has around 76 stores and concessions employing 347 staff. Peacocks approach is more at the value end of the market: it has 423 stores and more than 4,200 staff. Both companies have gone through administration before.
Both suffer from the decline in spending on clothing, the switch to online purchases by shoppers, the two lockdowns and threatened additional lockdowns in 2021, which make the future of fashion chains hard to gauge.
- Edinburgh Woollen Mill and Ponden Mill, both part of Edinburgh Woollen Mill Group (EWM Group), have gone into administration on 6 November with the initial closure of 56 EWM stores and 8 Ponden Mill shops.
Eight hundred and sixty-six staff are to be made redundant. EWM Group has been given another fortnight to determine the future of the Group, but it is likely that there will be further store closures and redundancies. Meanwhile the search for buyers for the EWM chains, inlcuding EWM, Peacocks, Ponden Mill, Jaeger and other brands continues.
EWM Group subsidiaries operate more than 1,000 stores and have 21,000 employees. The firm is a (previously) well-established company that bought a number of brands such as Jaeger, Austin Reed and Jane Norman from administrators.
It is owned by Philip Day. He owns Bonmarché separately from EWM Group, although their stores have also put up ‘closing down sale’ notices in store windows.
It was hit very hard by the coronavirus lockdown, needing to pay rent on almost one thousand properties with zero income.
So far the company has only reopened a little more than about one-half of its outlets after Lockdown I and they are all closed again following Lockdown II. Its orientation towards an older market, tourists, and market-town Mill-type general products attractive to people on shopping trips has been severely hit in 2020 (and possiby into 2021 as well). The store numbers figures quoted here are on the high side and rather dated, but EWM Group has 384 Edinburgh Woollen Mill stores and other shops trading as Peacocks (479), Bonmarché (220), Ponden Mill (65), James Pringle (and other names) (88 stores) and 27 stores combining several EWM fascias.
It is almost certain that a proportion will close. Apart from its sheer scale, the importance of Edinburgh Woollen Mill has been that in the last few years Philip Day has been the only entrepreneur actively buying distressed retailers apart from Mike Ashley’s Sports Direct (now Frasers Group).
- J Crew, American ‘preppy’ clothing retailer, is to close all six of its UK stores making their staff redundant. Its parent company has recently emerged from administration and seems to have decided to liquidate its UK subsidiary.
- Celine Group Holdings, the parent company of Debenhams, has called in FRP Advisory to prepare for its own administration.
This is understood to have been done to prevent any creditor taking action against them in the period when Debs is up for sale and trying to find a new owner.
It is said that interest is overdue on £200m of loans made to Celine: administration would mean there would be no need to pay it. Any administration of Celine would not affect Debenhams store operation per se.
- M&Co, the Scots-based value clothing retailer previously called Mackays, has gone into administrators and been bought by its previous owners as part of a pre-pack to save the business. There are 262 stores and 2,700 employees.
The covid-19 lockdown cost the firm more than £50m: in its last financial year profits fell by 40% to £3.6m. Forty-seven stores are to close (380 redundancies) as part of its recovery plan. The company was established in 1961.
- D W Sports, a sportswear and gym retailer owned by Dave Whelan, went into administration in the first days of August.
The company’s outlets – as non-essential retailers – have been closed since lockdown started: its 73 gyms were about to re-open until the change in government policy that postponed the resumption of trading by gymnasia, bowling alleys etc.
There are 75 DW Sports retail stores: these will all close in four weeks. The Group has a total of 1,700 employees. Twenty-five stores have closed already.
The Fitness First Group which is also owned by Dave Whelan is not to go into administration: its 43 clubs will remain trading.
- Feather & Black, the award-winning bed specialist rescued in 2017 from administration, has been bought by Dreams.
None of its stores is to reopen after the easing of lockdown. It will become online only, probably with concessions in Dreams.
Outstanding orders will be honoured. The Company was rumoured last February to be up for sale, so these closures are not strictly caused by coronavirus, although being closed for three months would not have helped its chances of survival.
- Grosvenor Shopping Centre in Chester went into receivership along with its car park earlier in July 2020. It was originally built in the 1960s and refurbished in the 80s. There are 101 retail units, all on one level. The Shopping centre continues trading.
- Oliver Sweeney Trading, the retail arm of the prestige shoe company Oliver Sweeney Group, was placed in administration in mid-July.
All its seven stores are closed as the company sees its retail future as online only. This administration does not affect the wholesaling and online arms of the business.
- Muji, the Japanese high-street homewares retailer, has applied for bankruptcy protection in the U.S. It has debts of $64m and the Covi-19 lockdowns in the UK and the U.S. have hit it hard.
It won’t be included in our UK figures, but, under U.S. law the corporation will be required to produce an exit plan to revamp the company. This may well have implications for UK stores. The stores continue to trade.
- Cardinal, the Yorkshire-based firm of shopfitters (outfitting or remodelling store interiors), went into administration in mid-July.
One hundred and thirty-five staff amongst its 170 employees have already been made redundant. Their business has been hit by the pandemic.
In addition their customers (ie the retailers) were unable to make firm commitments about work they needed in 2020, H2, into 2021.
The impact of covid-19 upon retailers has meant that most companies are now unsure about the number, type and location of stores that they are going to need in 2021-2025. The collapse of work for Cardinal is a symptom of the bloodbath on the high street.
- Soletrader, a footwear retailer established in 1962, went into a creditors’ voluntary liquidation in mid-July 2020. Its assets including stock and brand names Sole and Soletrader were purchased by its owner, the Twinmar Group, and are now invested in a new subsidiary, Twinmar London.
Most of the company’s stores opened for trading in July, but eight shops have been closed. Soletrader’s website is a separate entity and is unaffected by the liquidation.
- Peter Jones (China), a 50-year old crockery and gift business based in Wakefield, went into administration in mid-July. It had not opened after the lockdown eased. There were ten stores and 76 staff. The business is expected to be liquidated.
- Norville Group, a Gloucestershire-based firm of opticians and optical suppliers to the industry, went into administration early in June after selling its nine Norville Opticians’ practices the previous week.
Since then the former Norville laboratories, which were renowned for being able to produce lens to the very highest standard, have been acquired from administration by Inspecs, the new owener of the Norville Group, and continue to trade.
- Benson Beds, the beds and bedding business owned by Alteri, was put into pre-pack administration at the same time as Harveys (see below).
Alteri bought the business out immediately and put £25m into the company to invest in its development. There are 242 stores and 1,900 staff. Bensons (at present) is seen as a much better business than Harveys, most UK bedding is made in the UK, it faces less competition from overseas operators and Alteri is likely to focus on improving its operations, while keeping Harveys Furniture stable. The company continues to trade and existing orders will be fulfilled.
- Harveys Furniture, the second largest furniture retailer in the UK, was put into administration by its owners, Alteri Investors on the last day of June.
There are 105 stores, which have been struggling for some years, and 1,575 staff. The company is looking to close 20 stores and make 240 staff redundant. The company continues to trade and existing orders will be satisfied.
- T M Lewin, retailer of shirts and ties online and in 65 stores, went into administration on the last day of June after failing to find a buyer.
The shops have not re-opened following the relaxation of the lockdown. The busines had been acquired from Bain private equity only last month (May). The new owners, SCP Private Equity, expect to close all the stores, making the company online only. Six hundred employees are likely to lose their jobs.
- Bertram Books, the Norwich-based book wholesaler, went into administration towards the end of June 2020 with debts now (Aug 2020) known to be £25m.
Most of its 450 workforce has been made redundant. Bertrams was particularly important to smaller publishing companies.
Changes in the book market in the last 20 years including the growth of online sales and dramatic price cutting, highly-promoted ‘blockbusters’, the growth of Amazon and direct-to-customer applications as well as e-books adversely affected Bertram Books’ business model. But that is not all.
Sub-optimal decision-making by a succession of uncommitted owners have brought it down. Bertrams started in 1968 in a chicken shed in Elsie Bertram’s garden as a project for her and her son. By 1999, when it was first sold, Mrs Bertram was 86, Bertrams was the second-largest book wholesaler in the UK, and it employed 700 people.
In 2007, it was bought by the Woolworths Group and went into administration with the rest of the Company before being bought by Smiths News, the magazine/newspaper distributor of W H Smith. In 2018 it was bought by Aurelius, a German private equity group, who later sold Wordery, Bertram’s online operation, to the Waterstone’s book chain and Bertram’s library division to an Italian business.
The coronavirus pandemic, closing both libraries and bookshops, proved to be the final blow for Bertram Books. Was all this inevitable? Probably not.
- Intu Properties, the major property company that owns and manages some of the largest and best UK retail malls, went into administration on 26 June 2020. Many of its retail clients are not paying their rents and INTU’s creditors are not as forebearing.
It has total debts of £4.5bn, a merger with a European propery company came to nothing and it has failed to raise more capital. Its recent negotations with other parties, where it hoped to arrange a ‘standstill agreement’ with its lenders, led to no useful outcome, so it went into administration.
Major sites include Lakeside, Glasgow’s Braehead, Manchester’s Trafford Centre, Nottingham’s Victoria Centre and Norwich’s Chapelfield. This administration will be a major blow to the UK retail sector, although, coming after many other impossible-to-believe ‘major blows’, its significance may be less apparent.
It may not be possible for the Admiinistrators to run all the shopping centres without outside funding, although so far all sites have been kept open. It is still possible that many of their shopping centres will close unless a new potential buyer acquires some or all of them.
Some observers who have used the lockdown to re-think their personal philosophy may rejoice at the decline of this bastion of consumerism.
But the destruction of asset wealth in terms of commercial property, will adversely affect property prices, the stability of most retailers, pension funds, shares, unit trusts, tax revenue, job opportunities etc etc and bring home to the public the enormity of the slump we have managed to stumble into.
- Go Outdoors, the outdoor sports, walking, climbing, camping, riding and exercise retailer owned by JD Sports, wwnt into administration towards the end of June.
It was immediately bought out of administration by J D Sports for £56.5m (pre-pack administration), enabling hte company to be reorganised. J D Sports has stated that it wishes needs to re-think the Go Outdoors business but does not expect large-scale redundancies and closures.
There are 2,400 employees and 67 stores. Since the firm was bought by JD Sports it has lost £291m (to August 2019) and the massive losses caused by the coronavirus lockdown have only worsened the situation. In July, the Administrators estimated that unsecured creditors would receive only 1p in the £1.
- Lee Longlands, the Birmingham-based upmarket furniture retailer, went into administration towards the end of June to enable the company to restructure and improve cash flow. The company continues to trade and outstanding orders will be met.
There are six stores, mostly in the Midlands. Lee Longlands was purchased via a management buy-out in 2015. The company started in Broad Street Bham as an antiques business in 1902.
- Poundstretcher Properties, a company connected to discount-chain Poundstretcher, is to be placed into administration as part of a CVA programme by 450-store group Poundstretcher to reorganise its store portolio, cut rents and reduce other costs.
The Poundstretcher Group has argued that around 250 stores will close if the CVA is not approved by its creditors. Poundstrecher Properties holds the leases on only 23 stores and this will not affect the legal position or ownership of the group as a whole. Poundstretcher faces the same issues as the rest of the high street, compounded by the lockdown, now in its 85th day (it is really that long?).
- Oak Furnitureland, the specialist furniture store that started off on eBay, has gone into administration, and was immediately bought out of administration (pre-pack) by hedge-fund Davidson Kempner Capital Management.
There are 105 showrooms and 1,491 empoyees. The business continues still to trade, but the new owner expects to rationalise the business, probably through the closure of some stores and reductions in staff.
- French-themed retailer, bread/coffee/restaurant chain Le Pain Quotidien went into pre-pack administration in mid-June. It has been bought out of administration by a new vehicle, BrunchCo21, believed to be linked to its former owner, Cobepa. Ten of its 26 outlets have been closed with the loss of around 200 jobs in stores and the closure of its head office.
The new owners expect to negotiate T&C with the landlords of the remaining 16 properties, and the results may lead of course to further closures.
- Monsoon Accessorize, the womenswear and accessories chain with 181 stores, went into administration early in June. It is a private company owned by its founder, Peter Simon: it started as a market stall.
Monsoon Accessorize was immediately bought out of administration by Peter Simon. Thirty-five stores are to be closed with 545 employees being made redundant.
The business had 181 stores and 2,534 UK staff before administration. It is understood that Monsoon does not expect that every landlord will agree to the new conditions, but hopes to save around 100 stores and 2,300 jobs. The stores are based on careful, edited retailing which only encountered problems in the last decade.
In 2019 the company survived a previous crisis through a large cash injection from its owner, the closure of 40 stores and a CVA that cut rents on three-quarters of its stores.
The group’s survival after the current crisis will also depend upon how readily shoppers will return to physical stores post-coronavirus and by how much their tastes and buyer behaviour will have changed in this new environment. Monsoon’s international business is unaffected, with 49 stores and 966 staff outside the UK.
- Quiz, the Glasgow-based fashion group, put its physical stores division into administration in early June. Ninety-three head-office and warehouse redundancies have already been declared. The business wants to renegotiate rents for its 82 stores and the eventual size of the group will only be known, when this has been done. KPMG has been appointed to review the firm’s options, which are likely to include store closures. There are 915 staff in the stores division. Quiz’s online business continues unaffected, as are its 300+ concessions.
- Victoria’s Secret, the UK arm of the U.S.-owned global retailer, went into administration early in June 2020 having made a loss now known (Aug 2020) to be £100m in the last financial year. The UK fashion trade has experienced a torrid three years and the coronavirus lockdown, which prevented ‘non-essential’ stores trading (though not online), has been the final hammer blow. Victoria’s Secret has probably lost its original appeal: the aftermath of the Me-too campaign may have made the chain seem slightly tacky. There are 25 stores and 800 staff. The company sells ladies’ underwear. The company is reported as looking for a light-touch administration, allowing them to restructure the business, reduce costs and possibly find a new owner.
- Aldo, a Canadian-based international chain of stores, went into administration early in May. This has led to the UK arm going into administration at the end of May. Five UK stores have been permanently closed, leaving eight surviving while the administrators seek new owners for the UK business. The UK network is obviously up for sale, but many of the stores are franchised and are not ‘owned’ by Aldo Canada. Aldo shoes, handbags and accessories are still available for purchase in the UK both online and in its 28 UK concessions (including Selfridges, Debenhams and House of Fraser). The Irish arm of Aldo has already gone into administration. The company and its brands (chiefly ‘Aldo’ and ‘Call It Spring’) are major international businesses, operating around 3,000 stores globally served by 20,000 staff. Apart from the UK, Aldo businesses are expected to reopen as each government permits in the post-coronavirus world. The main reason the company gives for its problems is: the world-wide closures of its stores caused by governments’ attempts to limit the spread of coronavirus.
- DVF Studio, the luxury fashion company owned by Diane von Furstenberg, has gone into administration, citing ‘coronavirus’, and is closing its Mayfair store. The company has an online business as well as concessions in prestigious department stores, including Selfridges and Harvey Nichols. It announced earlier in 2020 that it was starting a subscription luxury service. The e-commerce business and concessions continue to trade.
- Antler, the luggage retailer which runs 18 stores and a concession, went into administration in mid-May. There are 194 employees: 164 of these have been made redundant. The Administrators announced in mid-July that they had successfully sold the brand name, Online business, stock and assets, but the stores remain closed and there was no news of their future.
- Johnsons’ Shoes, also trading as Bowleys Fine Shoes, went into administration in mid-May. There are 12 stores, all in the South East of England. The 145 furloughed staff will retain their jobs as the administrators seek to reopen the businesses. The group was later acquired by Newjohn Limited, part of Daniel Footwear. Six stores were closed.
- Dawson’s Music, one of the oldest stores selling musical instruments (est. 1898), went into administration early in May. There are six stores in Leeds, Manchester, Chester, Liverpool, Reading and Belfast. It is still opan and is hoping to be sold as a going concern. There are 75 staff. The coronavirus lockdown proved to be the last straw for a retail group that was already facing a decline in sales. There is also an Educational Division which supplies schools, colleges and universities. In late May, the chain was purchased by Andrew and Karen Oliver, who took over all the stores and retained the staff.
- J Crew, the U.S. fashion retailer with six UK stores, sought Chapter 11 bankruptcy protection at the beginning of May. It has 500 stores in the U.S., trades online, and owns the J Crew Factory and Madewell brands. It intends to continue trading online while it gives control of the business to its lenders who will cancel debts of $1.65bn (£1.3bn). It is unclear how this will affect its UK business.
- L K Bennet, the fashion retailer which went into administration in March 2019, is to extend its administration for another twelve months. The company expects to open seven stores on 15 June 2020 (when non-essential stores are allowed to start trading) with the remaining 10 stores to open at a later date.
- Oasis and Warehouse, two fashion retailers owned by Icelandic-Bank Kaupthing, went into administration in mid-April 2020, having failed to find a buyer for the group. All its 92 stores were closed, 2,300 staff made redundant and the 437 concessions terminated. The 13 stores and 29 concessions in the Irish Republic had already gone in into administration under Irish law: there were 248 staff in Ireland. The Oasis and Warehouse brands and e-commerce operations were bought by Hilco, which sold them in June to BooHoo, the successful e-commerce apparel business. BooHoo raised £200m in May to help it take advantage of ‘opportuunities’, and now also owns brands such as NastyGal, PrettyLittleThing, Karen Millen, MissPap and Coast. Concessions and stores in other countries will continue to trade. Oasis and Warehouse had been suffering recently from the problems common to most UK mid-range fashion businesses. The coronavirus lockdown – closing all its stores – made it impossible to continue operating and ended any chance of a sale to a business wanting the stores to continue.
- Debenhams, the UK department store group now owned by its lenders following administration in 2019, has appointed administrators once again to protect itself from its creditors. Creditors were considering using winding-up orders to get paid. Although the company has closed 22 stores this year and expected to close 28 in 2021, the new administration is likely to hasten the demise of many more of its outlets in the longer term. Although its online operations are supplying customers, all its stores are in lockdown. It has heavy debts of around £600m. The comapny is loss-making and without the sales revenue from its exisitng stores it is in deep trouble. Debenhams has closed its Irish division permanently, which has eleven stores, 958 staff and 300 concessions. Debs is also closing its Hong Kong and Bangladeshi subsidiaries.
- Spicers, the office-supplies wholesaler, employing 1,200 people started by John Spicer in 1796 ceased trading in April. It was originally part of the Spicer paper and stationery company and split in 1985. It built up a European presence, but the UK arm and the European operations were separated in 2011, Spicers being bought by Better Capital, the private equity firm controlled by John Moulton. When it went into administration its administrators were not able to sell it and the business was liquidated.
- Simply Scuba, an award-winning diving retailer based in Faversham, went into administration in June. Thirty-two jobs are at risk. SimplyScuba has won the Dive Retailer of the Year award for ten years in succession. The Simply Group also runs SimplyHike and SimplySwim. The Simply Scuba website continues to trade, with its new 500M Divers Watch on sale today for £109.
- Kath Kidston, the vintage-inspired fashion and accessories chain, appointed administrators early in April 2020. It has now announced that it will close its UK branches, concentrating on Asia, the wholesale business and online sales. The company – like many fashion retailers – has had problems in maintaining sales and profitability. Since 2018 it lost £27mn, resulting in its closing stores and cutting head-office staff. There are 200 stores globally. All 60 UK sites are to close, with only 32 of its 941 UK staff being retained. It will now operate in the UK as an online-only retailer. The company’s owners, Barings Private Equity Asia, have bought it out of administration on a pre-pack basis, having previously tried to sell it. Finances were so poor towards the end that initially Kath Kidson announced that they would only be paying part of the wages owed to employees: they have now agreed to make payments in full, but a up to a week late. The company suppliers, including HMRC and clothing manufacturers, are owned £90m by the failed company.
- Autonomy Clothing, a small fashion chain with three stores, 100 concessions and 44 staff, went into administration towards the end of March 2020. It has been beset by the same problems as the rets of the industry, the lockdown being the last straw. All employees have been made redundant.
- Lombok, the aspirational furniture and furnishings business, went into administration at the end of March. It operates both online and offline and is best known for its teak products made mostly from reclaimed timber. It has experienced two pre-pack administrations before (2009 and 2011). All 43 staff have been made redundant.
- Brighthouse, the rent-to-own household goods retailer, appointed administrators at the end of March 2020. There are 240 stores and 2,700 employees. The administration does not affect customers that rent goods, as their obligations will transfer first to the administrators and then to any new owner. This controversial business mainly deals with low-income households and was fined by the financial regulator for mis-selling and ‘unfair’ interest charged as part of consumer transactions. The compensation it must pay to 250,000 customers is understood to cost £1m per month and its most-recent financial report (February 2020) showed showed corporate losses of £16m. The company was originally called Radio Rentals whose business was renting out first radios and later TV equipment: they guaranteed to keep rented electronic goods in good repair at a time when electrical goods would often break down.
- Laura Ashley, the fashion retailer with 155 stores, went into administration in mid-March 2020. The administrators permanently closed 70 of the company’s outlets: 1,669 staff were furloughed and 677 staff continued working in the business with more redundancies announced in mid-June. Only 18 of its remaining stores have re-opened post lockdown, though this may not be ominous. Gordon Bros have been allowed to purchse the Laura Ashley brand and its archives, leaving the future of the stores, logistics and manufacturing in Britain and Ireland unresolved. The Pension Protection Fund is asking for another administrator to be appointed to ensure the protection of Laura Ashley shareholders. Laura Ashley has had problems for more than 20 years. Administration comes after a long period of poor results from a retailer that had been a star in the 80s and early 90s. The post-2016 deterioration in fashion sales affecting most clothing retailers was certainly a factor, but the failure of the business to match modern consumer requirements meant it was difficult to see the purpose of the company. Latterly it had more success with its furnishing and homeware than fashion. The conoravirus epidemic early in 2020 led to a sudden drop in footfall and store sales, which finally prompted the company’s move into administration. Gordon Brothers. a US-based restructuring corporation, bought Laura Ashley out of administration in late April.
- Kikki.K, an Australian-based retail group selling Swedish-designed stationery, has gone into voluntary administration as a result of the problems of Australian retailing plus the cost of its global expansion (now including Hong Kong, the UK, Singapore and New Zeal
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