Beales files for administration, but business as usual for now
today Jan 20, 2020
It has survived for almost than 140 years, but department store chain Beales has gone into administration Monday as urgent talks to find a buyer failed to produce an offer for the firm.
The retailer, which was the subject of a management buyout in 2018, warned early last week that it was planning an administration filing as general high street weakness, disappointing Christmas trading and the heavy weight of business rates made survival without outside funds an impossibility.
KPMG is handling the administration process and said: "Despite interest from a number of parties, [the sale] process did not secure any solvent solutions for the company, and as a result, the directors took the difficult decision to place the companies into administration."
But what does that mean for the chain that reported a £3.1 million loss in its latest year? Well, one thing it’s unlikely to mean immediately is redundancy notices for its 1,300 staff (plus the 300 who work in the branded concessions it hosts) and a rapid closure of its 22 stores.
As mentioned, it has been in sale talks (last week it was reported that two bidders were eyeing the business) and there appear to be no plans to liquidate the firm after the administration filing. While it couldn't find a buyer pre-administration, it could be a more attractive prospect now as it would be easier for a new owner to shed unwanted stores and cherry-pick the best sites.
Despite the devastation on the UK high street, the company continues to appeal to many consumers in affluent towns like Bournemouth, Poole and Tonbridge and is also in the unique position for a UK department store of having a big focus on busy coastal towns.
Despite the ’business as usual’ approach at present, it’s very likely that there will eventually be job losses and store closures under any new owner, whether that owner is an existing retail peer or an entity using private equity money.
As we mentioned, Beales has already survived for nearly 140 years but its history hasn’t been one of uninterrupted success until now. It has had its fair share of ups and downs during that period and when it was bought five years ago it was valued, at only £1.23 million. It also launched a company voluntary arrangement only a year after that. Since current CEO Tony Brown led an MBO in late 2018 (backed by restructuring specialist Hilco), it has faced devastating conditions on the high street, conditions that Brown said were the worst ever.
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