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SnapShop Monthly Summary – September 2013

 

Posted At: 19 September 2013 12:43 PM
Related Categories: Retail, Retailers

 

September has seen a number of positive news stories of increasing economic optimism in the UK, not least reflected by Gfk’s monthly consumer confidence barometer for August that revealed consumer confidence was at its highest level since October 2009.

The rise of three points in August to stand at -13 showed the biggest improvement in confidence over a four-month period since 1982, with consumers more willing to spend on major purchases, rising five points to stand at -16. This is 15 points higher than this time last year.

Further news of increasing optimism can be seen in the capital, with Oxford Street alone predicting sales figures of over £5bn this year, perhaps aided by the growth in the number of visitors from the Middle East, who, according to Global Blue, spent an average of £794 per transaction in the first six months of 2013.

Even the pipeline of shopping centre development is seeing green shoots of recovery, with an extra 1.5m sq ft of retail and leisure space being created throughout 2013. The 50,000sq ft Jubilee Place scheme at Canary Wharf, and the 50,000sq ft Yate Shopping Centre will join the already opened Trinity Leeds and Whiteley schemes. Intu is also planning a number of food court refurbishments throughout the rest of 2013.

September has been a quiet month in terms of administrations with only one reported, although with the rent quarter day looming there could be many more in our next report. Administrators Duff & Phelps were appointed to DME Fashion, trading as Pineapple. It is not yet known if the stores will continue trading through the administration process.

In contrast, September saw Textiles Direct bought out of administration by Home Center Retail, the owner of which is a director of a supplier to Textiles Direct. Textiles Direct succumbed to administration earlier this year in April 2013 after a decline in turnover.

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Out With The Old; In With The Old

 

Posted At: 13 September 2013 00:00 AM
Related Categories: Administrations, Retailers

 

The recent news of Mostyns falling into administration for the second time less than a year after it was sold through a pre-pack deal, got the SnapShop team thinking about just how widely they have been used since the start of the financial crisis in 2008.

According to figures from the Insolvency Service, around a quarter of all administrations in 2011 were pre-packs. Around 85% of these were sold to parties, namely directors, already linked to the business.

Examples of retailers to use pre-pack deals over the past year include:

  • Dreams which was acquired by Sun European in March this year in a £35m deal
  • Internacionale was sold in a pre-pack deal to its former directors in July this year
  • Walmsley Furnishings fell into administration for the second time in 18 months in November 2012 after a previously negotiated pre-pack deal failed to revive the business
  • United Carpets was acquired by its holding company just hours after entering administration in October 2012
  • Town Centre Restaurants immediately completed a sale to its existing management following the appointment of Zolfo Cooper as administrator in June 2012


It’s no wonder pre-packs are now one of the most controversial topics in UK business, with Mostyns and Walmsley Furnishings mentioned above both failing again after undergoing a pre-pack administration, and Internacionale now asking for rent concessions from its landlords in an effort to keep stores open until Christmas.
Supporters say pre-packs are a quick rescue of the company, securing jobs and providing a boost to the economy. On the other hand, critics argue that pre-packs often allow incompetent directors to resurrect their business through a buy-back, effectively “stitching-up” unsecured creditors to the business who lose out in the end.

Whether good or bad, the usage of pre-packs is rife throughout not just the retail industry, but the UK as a whole. It remains to be seen if there are actually any advantages to a retailer of the process, especially if the company fails not once, but two, three or even four times before the directors admit defeat.

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