The accelerating flow of high street coronavirus casualties looks set to continue this weekend as Cath Kidston, the modern vintage retailer, lines up administrators in a bid to secure its long-term future.
Sky News has learnt that Cath Kidston filed a notice of intention to appoint Alvarez & Marsal (A&M) as administrator late on Friday.
The move comes a fortnight after A&M was instructed to find a buyer for the business, which is owned by Baring Private Equity Asia.
The sale process is ongoing, and a number of credible expressions of interest in a takeover are said to have been received.
In a statement, a Cath Kidston spokesman said: “The notice of intention forms part of the process by which Cath Kidston is continuing to work with Alvarez & Marsal to explore all options for the company in the current climate”.
News of the filing comes 24 hours after Sky News revealed that Debenhams was on the verge of appointing administrators for the second time in a year.
Laura Ashley, Carluccio’s and BrightHouse, the rent-to-own chain, have all blamed COVID-19 for hastening their descent into insolvency proceedings.
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The notice of intention to appoint A&M does not automatically mean that Cath Kidston will fall into administration, but buys the company ten days of breathing space from creditors.
The brand, known for its floral and polka dot designs, was set up by its eponymous former boss in 1993.
Cath Kidston employs about 800 people, and trades from 60 stores in the UK – including a flagship outlet on London’s Piccadilly that opened in 2016.
It has become one of the most popular modern vintage designers, growing from a single shop in West London selling car boot finds and vintage fabric into a globally recognised brand offering fashion, homewares and accessories.
It made a fortune for its founder when she sold a stake to private equity firm TA Associates exactly 10 years ago in a deal reportedly worth £100m.
In 2014, Baring Private Equity Asia became a substantial shareholder in the company, before taking full control two years later.
Baring hoped to capitalise on Cath Kidston’s popularity in the Far East, with its 100th overseas store opening in Seoul, South Korea, in 2014.
However, it has lost more than £27m in the last two financial years, and made a further £11m loss before interest, tax, depreciation and amortisation in the nine months to December, according to information sent to potential bidders.
Globally, it trades from more than 200 shops, and boasts brand awareness of 70% in the UK.
A pre-pack administration is among the likeliest outcomes being explored, according to insiders.
Almost 40% of Cath Kidston’s revenue is generated from tourists and international business, particularly from Asia.
A turnaround strategy drawn up by Melinda Paraie, who joined as chief executive from luxury goods brand Coach in 2018, had begun to bear fruit prior to the coronavirus pandemic.
Under Ms Paraie, Cath Kidston has slashed operating costs by axing 40% of head office staff and closing a number of shops.
It has also sought to boost digital sales through a new online platform.
SOURCE : https://news.sky.com/story/coronavirus-vintage-retailer-cath-kidston-lines-up-administrators-11968548