More than 1,500 high street jobs are at risk after the clothing chain Bank Fashion collapsed into administration.
A team of restructuring experts from accounting firm Deloitte have been appointed as joint administrators of the loss-making retailer. The failure of the company, based in Bury, Greater Manchester, raises the prospect of more high street turmoil after a tough Christmas period characterised by heavy discounting and a surge in internet sales.
“Bank has struggled in a highly competitive segment of the retail industry and has been loss-making for a number of years,” said Bill Dawson, one of the administrators. He said a review of the business had concluded that a “solvent turnaround would not be possible”, leading to the administrators’ appointment.
Bank changed hands six weeks ago when JD Sports sold it to the turnaround specialists Hilco, which lists entertainment specialist HMV among its other investments. Bank has 84 stores, most of them in the Midlands, northern England and Scotland. It has 1,555 employees.
In 2007 JD Sports paid £18.5m for Bank, which sells more than 100 brands including Adidas Originals, Lipsy and AX Paris. But the fashion retailer, which is aimed at teenagers and twentysomethings, has struggled as high youth unemployment and fickle tastes made it a tough sector of the fashion market to succeed in. Hilco paid a token amount for the company’s shares at the end of November.
No redundancies have been made by Deloitte, which confirmed all stores were continuing to trade as normal. Deloitte also flagged that there was some hope for Bank employees, given that several parties had already come forward to express an interest in the business.
“The administrators are trading as a going concern with a view to progressing these options and seeking further interested parties for some or all of the business,” Dawson said. “All stores are open as normal, staff have been paid and additional sale discounts will be implemented later this week.”
It is common for struggling retailers to appoint administrators immediately after the busy Christmas trading weeks. Strong seasonal takings make the post-Christmas period the point in the retail year when struggling chains are most likely to be able to pay their debts, while avoiding making big financial outlays – such as rent and buying new stock – for the year ahead.
A recent report by Begbies Traynor painted a grim picture of the health of the high street, with its analysis detecting a 54% increase in significant financial distress among UK retailers compared with last Christmas.
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