Commercial property footwear group Barratts has collapsed into administration for the second time in two years, leaving nearly 4,000 jobs at risk just in time for Christmas.
The commercial property company, which has 191 shops and 371 concessions trading under the Barratts and Priceless names, has appointed Deloitte as administrator after falling victim to the slowdown of spending on the high street and increased competition from cut-price competitors. Its sales of new winter lines have also been hit by the unexpectedly warm weather conditions.
The Bradford-based group, controlled by Michael Ziff was concerned about its ability to pay its quarterly rent bill due to tough trading conditions on the high street.
Still commercial property Barratts problems are nothing new. The retailer was put into administration back in 2009. Michael Ziff, the Chairman of Barratt’s owner Stylo, whose family remain the biggest shareholders in Barratts Priceless, managed to buy back 160 of 280 stores, though 2,500 jobs were lost. It is hoped that a similar rescue will happen this time.
However the Financial Times stated that retail analysts have little trust that the commercial property footwear retailer will be saved considering the on-going turbulent economic climate.
The commercial property shoe group has faced pressure from low cost stores like New Look, Primark and even supermarkets, rather than direct rivals such as Clarks, with some analysts arguing that Barratts Priceless was too slow to respond to the cheaper competition.
Joint administrator and partner in restructuring services at Deloitte, Daniel Butters, said: “Barratts and Priceless Shoes have faced a downturn in trading as a result of the difficult economic conditions. This has been exacerbated by the unseasonably mild weather in recent weeks, which resulted in fewer sales across new winter lines.” Mr Butters maintained they were working with suppliers “to ensure the business has the best platform to secure a sale, preserve jobs and generate as much value as possible for creditors”.
Deloitte said it would continue to keep Barratts trading while seeking a buyer for all or part of the commercial property business as a going concern in a bid to save 3,840 jobs. Arcadia’s owner, Sir Phillip Green could play a vital role in deciding the future of Barratts Priceless with the majority of Barratts 371 concessions being in Arcadia Group’s Dorothy Perkins and BHS.
The privately owned Barratts Priceless Group made a pre-tax profit of £6.1m on a turnover of £218m in the 18 month period to 31 July last year.
In October, Barratts announced Richard Segal would become chairman. At the time he said: “Like many other retailers, the company is currently operating in a challenging economic environment and I look forward to working with the executive team to accelerate its adaption to recent market changes.”
And in a newspaper interview less than 12 months ago, Michael Ziff said he was still scarred by the “traumatic” experience of cutting 2,500 jobs in 2009. He said: “This is something I would never ever want anybody to go through again.”
Meanwhile cut-price fashion outlet Peacocks is rumoured to be shutting 200 stores out of 611 UK stores and 117 overseas, risking 2,500 jobs.
The commercial property company, which also owns 400 Bonmarche outlets in Britain made a total of £66 million profit in the 12 months to March this year however trading is thought to have weakened since then.
Bosses of the commercial property fashion outlet, revealed back in October they were restructuring and looking to tackle their £240 million debt to safeguard the company’s future.
The talks over the future of the commercial property business, involve a large syndicate of banks headed by Barclays and the partly state-owned Royal Bank of Scotland.
Lloyds Banking Group, another part-nationalised bank, sold most of its interest in Peacocks’ debt to a firm called Strategic Value Partners a number of months ago. Goldman Sachs, which is both an investor and a lender in the clothing company, was expected to become Peacocks’ leading shareholder after the debt restructuring.
A spokesman for Peacocks, said: “We continue to progress our restructuring discussions and plans, with no decisions taken at this point.”
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