UK-based women’s value clothing retailer Bonmarché has fallen into administration after failing to restructure its business fast enough to meet today’s new trading realities.
The Wakefield-based business sells fashions for the over-50s, and employs 2,887 people, including 200 staff at its head office. It trades through 318 stores across the UK, online and by telephone.
Joint administrators Tony Wright, Alastair Massey and Phil Pierce, partners at specialist business advisory firm FRP Advisory, say the retailer’s directors decided to place the business into administration after a “sustained period of challenging trading conditions and cashflow pressure, which meant the business was unable to meet its financial obligations as they were due.”
It added the joint administrators will now continue to trade Bonmarché while assessing options for its future. All stores remain open and no redundancies have been made.
“Bonmarché has been a staple on the UK high street for nearly three decades, but the persistent challenges facing retail have taken their toll and led to the administration,” says Wright. “There is every sign that we can continue trading while we market Bonmarché for sale and believe that there will be interest to take on the business.”
The retailer was taken private earlier this year by billionaire businessman and Edinburgh Woollen Mill-owner Philip Day after his investment vehicle Spectre Holdings closed its takeover of the company with a 93% share. The move was seen as key to giving the struggling retailer some breathing space to reconsider its turnaround strategy and make short-term, potentially high-cost decisions such as existing leases.
In March the retailer issued a full-year profit warning, following significantly weaker trading.
Commenting on the administration, Richard Lim, chief executive of Retail Economics said: “Unfortunately, it’s another example of a retailer who hasn’t been able to restructure the business fast enough to meet today’s new trading realities. The migration towards online shopping and lower levels of footfall have collided with rising operating costs which has eroded profitability. Put simply, the business model is broken.
“Apparel retailers face the brunt of these challenges. Many have too many stores, unsuitable space and can’t pivot their business models fast enough because of inflexible lease structures and years of under investment in online.
“As the administrators are called in, distressed discounting of stock will impact their competitors in the all-important run-up to Christmas.”
Source – Just Style.com