Over 3,000 jobs at risk in high street chain administrations
23 Oct 2019
As financial distress on the high street deepens, administrators have been appointed at womenswear fashion chain Bonmarche and Scottish department store Watt Brothers
23 Oct 2019
FRP Advisory is handling Bonmarche and KPMG is dealing with Watt Brothers.
Tony Wright, Alastair Massey and Phil Pierce, partners at FRP Advisory, have been appointed as joint administrators to Bonmarche, which specialises in lower-priced clothing for the over-50s market. Headquartered in Wakefield, the company employs 2,887 people, including 200 staff at its head office, and trades through 318 stores across the UK, online and by telephone.
The directors took the step to place Bonmarche into administration following 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.
Tony Wright, joint administrator and partner at FRP Advisory, said: ‘Bonmarche 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.
‘There is every sign that we can continue trading while we market Bonmarche for sale and believe that there will be interest to take on the business.’
This marks the second time Bonmarche has fallen into administration in seven years, after it was previously bought in a rescue deal by private equity firm Sun European Partners in 2012. In April this year Philip Day, the owner of the Edinburgh Woollen Mill chain, which includes Jane Norman, Austin Reed and Peacocks, acquired a 95% stake in the retailer.
Separately, Blair Nimmo, partner, and Alistair McAlinden, director, of KPMG have been appointed as joint administrators of Watt Brothers. This is a fourth generation family owned business incorporated in 1915, which operates a chain of department stores including its freehold flagship store on Sauchiehall Street, Glasgow and a further 10 leasehold stores across central Scotland.
The stores sell a wide range of well-known branded products across departments including fashion, electrical, homeware, jewellery, outdoor pursuits, gifts, health and beauty.
The administrators said Watt Brothers’ turnover has increased year on year, peaking at approximately £24m in 2018. However, in line with many retailers, the increased revenue has not translated into profit as they have faced significant margin challenges in recent years. The strain on margins, coupled with increased competition from online and new discount retailers resulted in Watt Brothers generating a loss in 2018.
As trading losses continued during 2019, Watt Brothers embarked on a process to secure new investment into the business. However, this was ultimately unsuccessful, leading to the directors taking the decision to appoint administrators.
Of the 306 employees, 220 have been made redundant with immediate effect, while the remaining staff are assisting the joint administrators in the process of realising the company’s assets, including stock and the freehold property. The joint administrators said they are rapidly exploring whether an early sale of some of the business and assets can be secured. Watt Brothers will continue to trade from the flagship store in Glasgow, launching a stock clearance event.
Blair Nimmo, joint administrator and UK head of restructuring at KPMG, said: ‘Despite the director's tireless efforts to increase margins, cut costs and recapitalise the business, Watt Brothers continued to incur trading losses as a result of the well-publicised challenges being experienced across the retail sector.
‘Ultimately this has led to the unfortunate demise of a well-known and highly-regarded business.
‘We will be holding a stock clearance event and are grateful to the remaining staff for their efforts and assistance at this difficult time.’