Blog: Creditors call the shots
Leonie Barrie | 16 February 2009
The power wielded by creditors came to the fore last week with two very different outcomes. Retail operator Stylo, the owner of the Barratts and Priceless shoe chains, edged closer to administration after last-minute talks with creditors failed, putting 5,400 jobs at risk. But sportswear and equipment retailer JJB Sports was given extra time by its bankers to complete the sale of its fitness clubs business and pay off its debts.
Stylo, which operates 384 footwear stores, appointed Deloitte as its administrator after landlords rejected a company voluntary arrangement (CVA) designed to turn the business around. Administrator Deloitte is now seeking a buyer for the business and could close a "significant number" of its stores – although Stylo chairman and chief executive Michael Ziff is reported to be working on a rescue deal to try to buy back the business.
One immediate casualty of the uncertainty surrounding the future of Stylo is shoe supplier Browning Group, which last week said it was winding up its business.
The deal agreed between JJB and its bankers is designed to give the retailer time to complete the sale of its fitness clubs business, which should enable the company to pay off its debts, estimated at GBP60m. However, it has already placed its lifestyle division into administration, putting up to 800 jobs at risk at its 77 Original Shoe Company (OSC) and Qube footwear stores.
Changes continue to stir up the US market too, with retail giant Wal-Mart Stores cutting between 700 and 800 jobs at its Walmart US and Sam's Club operations – including an unspecified number of apparel positions – proving even discount operators aren’t immune from the economic storm.
The jobs will go at the discount retailer's head offices in Bentonville, Arkansas and will include merchandising, real estate, marketing and support posts at Walmart, as well as merchandising positions at Sam's Club. Wal-Mart says it will also move apparel buyers from Bentonville to New York to increase its focus on fashion.
And sportswear giant Nike says an ongoing restructuring of its business could lead to the loss of up to 1,400 jobs, equating to 4% of the company's global workforce. All regions, brands and divisions are being reviewed as part of a long-term drive to cut costs, increase efficiencies and bring the Nike business closer to the consumer. But the US company is stressing the changes are part of a wider restructuring announced a couple of years ago rather than a symptom of the current economic climate.
There are also problems afoot in the luxury market after the Italian owner of the Gianfranco Ferre fashion label named commissioners to oversee the administration of Ittierre SpA, its young lines division. It hopes the move will allow Ittierre, which is licensed to produce and distribute ready-to-wear under the VJC Versace, Versace Sport, Just Cavalli, C'N'C Costume National and Galliano brands to stay in business while being restructured.
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