Buyer sought after Select administration, struggled to compete with big names
today May 10, 2019
Cafer Mahiroğlu’s fashion retail chain Select is now officially in administration with the hunt on to find a new owner. If the administrators are unsuccessful in that search, it would mean the loss of 1,800 jobs.
And even if a buyer can be found, it's likely that a number of stores will close, which could also mean a large number of job losses.
The process is being overseen by Andrew Andronikou, Brian Burke and Carl Jackson of advisory firm Quantuma, who were appointed as joint administrators on May 9.
They now have to try to find a new owner in one of the worst periods ever for fashion retail in Britain. And it's not as if Select has a glorious history of business success before its most recent troubles. The company is in administration for the second time (the previous administration filing coming just over a decade ago) and also underwent a CVA process around a year ago.
At the time, it had a turnaround plan, but Quantuma said the conditions out there for physical stores were such that it couldn’t deliver on that plan.
Andronikou said: “We will continue to trade Select whilst we assess all options available to the business. Options include a sale of the business as a going concern, in addition to entering into discussions with those parties who have already expressed interest in acquiring the business. We will also be assessing CVA proposals that have been put forward by the directors.”
Select has around 169 shops and, as mentioned, employs around 1,800 people. No redundancies have been made so far.
Analyst Honor Strachan of GlobalData said that “Select is another example where a CVA is not always the saviour for a troubled retailer, with deep-rooted commercial and operational issues beyond the help of a store cost-cutting exercise.”
She added: “One of the contributors to its downfall, and profit losses, has been the burden of its store estate. Rising costs and high business rates continue to make it extremely challenging for smaller fashion chains to operate profitably, forcing store closures and leading to share acquisition opportunities for the online pureplays as they can be more competitive on price and still produce better margins.”
She also said that “the young fashion market has shifted so significantly in the last five years, that to its credit Select has managed to hold on until now. But the likes of Boohoo, Missguided and ASOS, as well as physical players H&M and Primark, have innovated, adapted and responded to the changing needs of the 16-30 female audience – stealing share and leaving Select feeling outdated and lacking relevance.”
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