Pic: Vogue for French Connection
October’s Retail Armageddon: French Connection, Peacocks and Edinburgh Woollen Mill in trouble but Poundstretcher plans on opening new stores despite agreeing a CVA to slash rents as ICSM Credit slams it as 'the new normal'
Less than half of stores in Birmingham’s Bullring Shopping Centre paid their rent for the final quarter this year. If there was one fact that demonstrated the dire situation the retail sector is in that summed it up as along with Oxford Street, The Trafford Centre and Westfield in London the Bull ring is the top ten retailing centres in the UK.
The trade publication Retail Gazette reported: “Shopping centre giant Hammerson said just 38 per cent of its UK tenants had paid rent for the final quarter of the year. In an update this week, Hammerson noted the level of fourth quarter collections were higher than at the same point following its June quarter date collections, even with the UK’s extension of the moratorium on business evictions. The Birmingham Bullring owner said that as of Tuesday October 13, all of its shopping destinations had reopened, with 94 per cent of its tenants allowed to trade in the UK and Ireland. Last month the Government announced that it would extend support to stop business evictions until the end of 2020.”
French Connection troubles
Ian Carrotte of ICSM Credit has issued warnings to members of the credit intelligence organisation this year over extending credit facilities to retailers as the Covid-19 shut downs continue.
Already a long list of household high street names have gone bust owing millions of pounds to suppliers. Others have entered administration or agreed pre-packs and a majority have not been paying their rent as illustrated in Birmingham.
“If a famous name suddenly sends a small business a purchase order out of the blue this autumn stop and think why,” he said, “if the majority of retailers at the Bull Ring are not paying their rent then they are unlikely to pay for your goods. Payment upfront is the best guarantee.”
French Connection has permanently closed down four stores and five concessions this year with revenue down 53% but in July secured a £15million debt facility with Hilco that is expected to keep it going for the next two years.
Peacocks on the brink
One of the nation’s best known budget retailers is on the brink of collapse and sending thousands onto the dole. Edinburgh Woollen Mill, owner of the Peacocks and Jaeger clothing brands, is set to appoint administrators in an attempt to save the business.
If it happens then 21,000 jobs would go and suppliers would be left millions in debt and landlords with empty units and no rent.
"Like every retailer, we have found the past seven months extremely difficult," said Edinburgh Woollen Mill chief executive Steve Simpson. The business is owned by Philip Day but will continue to trade as administrators look for a restructuring of the group or a buyer or a pre-pack.
Ian Carrotte said Philip Day ‘has form’ and new suppliers should be wary. “The Sunday Times in May said he was worth more than a billion pounds,” he said, “When he bought Bonmarche out of administration in February all the suppliers were expected to write off what they were owed. That caused a lot of ill feeling as bad debts can destroy businesses and lives.”
Closing and opening
The Retail Gazette has reported an extraordinary twist in the on-going sage of Poundstretcher, the budget retailer who is a sort of Woolworths of our times.
They reported that despite securing a CVA and some breathing space they were actively looking to open new stores while shutting down branches.
The trade publication said: “Poundstretcher is reportedly seeking to open 50 new stores despite recently launching a store closure programme in an effort to cut costs. According to a poster produced by the business, it is on the look-out for dozens of new sites to open in 2021. These sites will range from existing shop units to development sites in town centres and out-of-town retail parks.”
Ian Carrotte said it was incredible that despite planning to slash more than 2,000 jobs and close 200 stores the management were seeking to open shops in 2021.
“It’s the 2021 mindset,” he said, “It’s becoming the norm for survival – to shut down and open up – once the debts have been managed or dumped. The biggest losers are the staff and the suppliers. It’s no way to build trust in a business as suppliers will feel once bitten twice shy.”
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.
For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.
To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com
For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk