Peacocks makes its swan song as it calls in the administrators

After months of keeping its head above water, Peacocks calls in the administrators, making it the biggest retailer to collapse since Woolworths.

by Elizabeth Anderson
Last Updated: 06 Nov 2012
Peacocks’ chief executive, Richard Kirk, had spent the best part of this week trying to thrash out a deal with the banks. But talks fell through on Wednesday, leaving the firm with no way of restructuring its debt, which runs at about £600m. Almost 10,000 jobs are now at risk at the clothing chain, which has 611 stores and 49 concessions, making it the biggest retail administration since Woolworths in December 2008.

Despite reporting a like-for-like sales increase of 17% over the Christmas period, Peacocks’ problems ran much deeper. At the height of the credit bubble in 2005, its main owners Goldman Sachs and two US hedge fund groups, Och-Ziff Capital Management and Perry Capital, backed a £400m management buy-out which made the company a privately owned business. This left the chain with hundreds of millions of pounds of debt.

Kirk said that he had ‘worked tirelessly over the past year to agree a new financial structure to take the business forward’, but in the end the tough retail environment proved too difficult. The drop in consumer spending, alongside high overheads, meant the firm’s business model was ‘financially nonviable’, the appointed administrator KPMG said. The retailer’s sister chain, Bonmarché, is still trading outside of administration, and looks likely to be picked up by Sun European Partners.

Elsewhere on the high street, news is more cheerful. Primark’s sales surged over Christmas, with total sales at its 232 stores across Europe up 16% on the year before. Associated British Foods, Primark’s owner, also said revenues were 12% higher at its Allied Bakeries division, which includes the Kingsmill brand.

But as the example of Peacocks shows, a strong sales period doesn’t necessarily mean a retailer can breathe a sigh of relief. Accountancy group RSM Tenon warned recently that 8,994 retailers are at risk of insolvency. Past Times, which went into administration this week, and Peacocks are two major retailers to recently do under. Undoubtedly they won’t be the last this year.

Tags:
Economy Retail

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