Pretty Green administration filing 'expected next week'
today Mar 22, 2019
Another week, another likely UK fashion brand going under. The Liam Gallagher-backed label Pretty Green is expected to appoint administrators in the week beginning March 25 as the tougher-than-ever retail environment claims its latest victim.
The 10-year-old menswear business has filed a notice to appoint Moorfields Advisory to handle its insolvency process, according to reports.
That notice had been designed to give the company, which had called in Moorfields as advisors a little under a fortnight ago, time to find new investors. But the notice expires next week and there’s no news on fresh investment cash just yet, Sky News reported, citing unnamed City sources.
That said, the news organisation said a buyer could still be found with a deal most likely to be clinched post-administration.
The advantage of that approach would be that a new investor wouldn’t be tied down by lease obligations for the company that operates from a dozen standalone stores in Britain. It also has around 40 in-store concessions and a wholesale business.
There has been interest shown in the brand since Moorfields began sounding out potential investors and it’s not known if its current owners would try to buy it back.
Sky said that it understands the business would not be sold solvently, which would mean the stakes held by existing shareholders would be worthless. Gallagher, the ex-Oasis frontman, isn’t the only shareholder with reports that Rockpool Investments bought a minority holding two years ago and that footballer Joe Cole also has an interest.
There clearly remains potential in the brand that Sky said had turnover of around £28 million in the year to January 31. It was profitable on an Ebitda basis, although it made a mere £176,000, but a higher Ebitda profit has been predicted for the year to 2020.
So what has gone wrong? Some of the firm's recent troubles have been attributed to the House of Fraser administration last year. It had a number of concessions there and money owed won’t be recoverable. A raft of other big UK names have also listed large losses from their HoF concession businesses.
And any mention of HoF, also raises the prospect that its new owner, acquisition-hungry entrepreneur Mike Ashley, might try to buy Pretty Green. While also busy on other fronts (running HoF, trying to take control of Debenhams and buy Magasin du Nord, and also reportedly trying to buy LK Bennett), a Pretty Green buy would certainly fit into his current strategy of gathering distressed-but-respected brands under his Sports Direct umbrella.
Edinburgh Woollen Mill’s Philip Day has a similar strategy having bought a number of well-known brands, including Jaeger and Aquascutum and is always worth considering when brands are up for grabs. But a number of private equity firms could also be interested.
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