LK Bennett is in administration, most stores stay open as buyer hunt goes on
LK Bennett filed for administration on Thursday with the firm’s intention to file having perhaps been the worst kept secret in retail of late. It had been widely flagged last week as the company realised its cash flow situation wasn't going to ease and its search for new investors had failed.
With no new backers having emerged, the collapse of the premium footwear-to-fashion chain means 500 jobs are under threat, although for now, most of the firm’s stores are continuing to operate as usual.
However, the webstore operation is suspended at present. The home page says: “Thank you for visiting LK Bennett, we’re experiencing some issues but should be up and running again soon.” Whether that’s a general holding message or actually means that the webstore might make a speedy return isn’t clear at the moment. On Thursday afternoon, the firm’s customer service phone line was also closed.
So what exactly happens now? Accountancy firm EY is overseeing the administration process and it seems that five stores have been closed immediately and 55 people have already been made redundant. The shuttered stores are in Sheffield, Bristol, Liverpool and London (Brent Cross and Westbourne Grove).
"Amidst tough trading conditions for retailers, the company has been further impacted by significant rent increases and business rate rises," joint administrator Dan Hurd said. He added that the closures were aimed at protecting the future of the business, so there’s clearly a belief at the moment that it does have a future.
"LK Bennett is a strong luxury UK brand, the new season collection was critically acclaimed and recent trading is up, which we hope will be attractive to prospective buyers,” he said.
That should offer some hope to the 500 staff who work in its 39 UK stores, 37 concessions and head office, as well as its international retail operation. With stores abroad included, it has around 200 locations.
The company has been through some volatile times in recent years with founder Linda Bennett having been brought back into the business (she’d sold it a decade ago to private equity) as a consultant to try to return it to growth. She bought back full control around 18 months ago but seemed unable to boost its performance in the face of an unprecedented downturn in the fashion retail sector.
The firm was reported last moth to be seeking a new backer but in the current retail climate, such fairy godmothers can be hard to come by. Potential buyers often seem more interested in snapping up a company post-administration as it means they can avoid taking on under-performing stores and debt loads, allowing them to start with a clean slate.
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