Coronavirus: Cath Kidston set to call in administrators
Cath Kidston, the floral fashion brand, is set to file for administration as the coronavirus shutdown pushes High Street retailers to breaking point.
The move will put nearly 950 jobs at risk at the company which is best-known for its brightly-coloured designs.
Debenhams, the department store chain, is also expected to appoint administrators as early as this week.
And reports have emerged that Topshop-owner Arcadia may walk away from the leases on some of its 550 shops.
Cath Kidston confirmed that it intends to appoint advisory firm Alvarez & Marsal as administrators.
A spokesperson said it was part of an ongoing process to explore all options for the company which was in the middle of a turnaround plan before the global Covid-19 pandemic hit.
Cath Kidston employs 941 people, of which 820 have been furloughed under the government’s employee payment scheme.
After the coronavirus outbreak forced store closures, Cath Kidston has stayed open online.
But most employees were furloughed on 22 March which means the government will pay 80% of an employee’s wages up to £2,500 a month.
An urgent review of the business began last month and there has been interest from possible buyers.
The chain sells home furnishings, clothes and accessories in trademark floral and vintage prints. It has 60 shops in the UK and a presence in 200 globally. Founded in 1993, it was bought by Baring Private Equity Asia in 2016.
It is thought a so-called pre-pack administration is now the most likely outcome for Cath Kidston.
Debenhams, which employs around 20,000 staff, is also understood to be considering a pre-pack administration.
If it goes ahead, it will be the second time in a year that the retailer has filed for administration.
It is understood Debenhams wants to protect the business against claims from creditors including suppliers who are yet to be paid.
Meanwhile, the Sunday Times reported that Arcadia, which is owned by Sir Philip Green, is preparing to walk away from a number of its property leases.
A spokesman for Arcadia said: “No decision has been taken at this time.”
Arcadia has furloughed 14,500 of its 16,000 employees since the coronavirus lockdown and said its board members and senior leadership are taking pay cuts of between 25% and 50%.
Arcadia is also facing uncertainty over the future of its concessions in Debenhams’ stores which include the brands Dorothy Perkins, Evans, Miss Selfridge and Wallis.
As the High Street remains in shutdown, some retailers such as Primark have opted to cancel orders with their suppliers.
Fashion chain New Look recently informed its suppliers that payment for stock already sitting in its shops or distribution centre would be delayed “indefinitely”.
While the coronavirus has heaped pressure on many businesses, independent retail expert Clare Bailey said retailers had already been under strain for the last two or three years because of the uncertainty surrounding Brexit and its effect on consumer confidence.
“[Coronavirus] was the final straw of all the straws that broke the camel’s already very broken back,” she said.