British shoe brands Barratt and Priceless revived from administration
21 Feb 2009
The management of Barratt Shoes and Priceless Shoes have struck a deal that will save 3,000 jobs, the administrators of the British shoe retailers said. However, the deal only covers 160 stores and 165 concession outlets and the remaining 220 stores will close, with the loss of 2,500 jobs, the administrator, Deloitte, said.
Barratt and Priceless were put in administration on 26 January, followed by parent company Stylo on 17 February.
"Due to difficult short term financial difficulties and the long term sector outlook...the store portfolio was deemed to be too large, and unable to generate sufficient profits to cover its cost base," Deloitte said in a statement. It added that as a result of the deal with existing management, led by Chairman Michael Ziff, the Barratt and Priceless brands would continue on Britain's shopping streets.
The Ziff family, which founded Stylo in 1917, has created a new company to run Barratts and Priceless and injected "substantial amounts of money" in the form of equity and long-term debt. Michael Ziff hopes to turn Barratts into a more upmarket retailer selling branded shoes, while Priceless will be a discount chain.
Ziff bought the 265 stores and concessions that will survive out of administration following controversial rescue plans being rejected by landlords. He expressed his frustration at the property companies, claiming some "don't know which way to turn" amid the recession and were acting like "rabbits looking into headlights".
"Shopping centres will end up looking like coffee shops and mobile phone stores," Ziff said. All landlords need to rethink demanding rent payments quarterly, he said, and charging rents per square foot is a disadvantage to fashion retailers who require more space to store stock. "There is going to be a load more retailers going through the administrators' door," he added.
Sales at Barratts and Priceless had been dropping and they were paying more rent than they could afford. In response, Stylo worked with Deloitte on a proposal that would allow them to pay lower rent and close some lossmaking stores gradually. Deloitte trumpeted the deal as a novel approach and a possible alternative to pre-pack administrations, which are unpopular with unsecured creditors. However, landlords balked at the proposal, which they feared would prompt other retailers to try to wriggle out of agreed terms.
