Day of reckoning

THE Edinburgh Woollen Mill chain may be liquidated if a buyer is not found.

Owner Philip Day is working to save value fashion retailer Peacocks and jettison the rest of the group, according to reports in trade publications this week.

EWM Group, which has Peacocks, Jaeger, Austin Reed and Ponden Home, filed notice of its intention to appoint administrators earlier this month. This is due to expire today.

The deal means Peacocks would be acquired out of administration, with its worst-performing stores axed, led by EWM’s chief, Steve Simpson, and backed by Day.

Peacocks has about 400 stores and would be run alongside Bonmarché, the struggling womenswear retailer fashion chain which Day bought this year and sits outside the EWM group.

The group employs about 24,000 people and traded from more than 1,100 outlets before the COVID-19 pandemic.

The deal is contingent on Day securing a capital injection from a US hedge fund, which would take a minority stake.

If a deal can’t be struck by today, EWM will call for a 10-day extension at the High Court.

The proposed deal would not include the Edinburgh Woollen Mill chain, which could be liquidated unless a buyer is found, according to Retail Gazette.

Last week EWM Group shut 50 stores, putting 600 people out of work.

Landlords criticised the administration proposals outlined by representatives.

In a letter EWM said administrators were reviewing its lease portfolio with a view to determining which stores, if any, may be “retained and/or potentially transferred by the company”.

The company later warned landlords that another 100 to 150 stores would shut imminently.

On stores, which will survive, Day has appointed property agents to hammer out new leases at vastly reduced rents.

Ratcliffes Chartered Surveyors, which manages four retail properties leased to the EWM Group, said its clients were surprised by the decision of a company which reported pre-tax profits for the year to November 2019 of £23.4m and for the half year to March 2020 of £14.7m”.

Ratcliffes’ landlord clients rejected EWM’s proposals for the stores in question.

In a letter to EWM, it said: “My clients consider that, if your hitherto very successful company is to be saved, with its stores and employees retained, the person best placed and most responsible to do that is its non-resident billionaire owner, Philip Day, by repatriating some of his tax-sheltered profits.”

Estates Gazette reported that Mr Simpson sought confirmation from landlords that they would not claim for lease liabilities during the administration process in a rent-free period, which would end only 28 days after a termination notice from the property owner if it chose to send one.

The alternative was to forfeit or surrender the lease, resulting in redundancies at each property in question.

“There is an unprecedented unanimity of views from landlords to reject EWM’s proposals,” said one landlord, who did not wish to be named.

An EWM Group spokesperson said: “Throughout this extremely tough time we have worked to be fair to our staff and all our partners, including landlords.

“The pandemic and the lockdown have forced all retailers to make difficult decisions and EWM Group is no exception.

“Our priority remains securing the survival of our businesses and saving as many jobs as possible.”