FRP said its team is working with the directors of a number of EWM Group subsidiaries to explore all options for the future of its retail brands

FRP said its team is working with the directors of a number of EWM Group subsidiaries to explore all options for the future of its retail brands

Retailer Edinburgh Woollen Mill Group, which also owns the Peacocks, Austin Reed and Jaeger brands, has filed a notice to appoint administrators in a move that potentially puts 24,000 jobs at risk.

The move gives the company a breathing space of ten days before it formally files for insolvency, while specialist advisors at FRP look for potential buyers. A spokesperson for FRP told just-style: "Our team is working with the directors of a number of the Edinburgh Woollen Mill Group subsidiaries to explore all options for the future of its retail brands Edinburgh Woollen Mill, Jaeger, Ponden Mill, and Peacocks."

According to Sky News, EWM executives told employees this morning (9 October) that national and local lockdowns, brought in by the government due to the coronavirus pandemic, had hit sales hard.

"The company also blamed allegations, which it denies, that it and several rivals failed to pay some Bangladeshi suppliers during lockdown in an attempt to cut the cost of clothes they were unlikely to sell.

"For now, EWM Group's stores will continue trading while insolvency specialists spend ten days preparing an urgent review ahead of further action," the report said.

It cited chief executive Steve Simpson saying that "in recent weeks as we have had to deal with a series of false rumours about our payments and trading which have impacted our credit insurance. 

"Traditionally, EWM has always traded with strong cash reserves and a conservative balance sheet, but these stories, the reduction in credit insurance, against the backdrop of the lockdown and now this second wave of Covid-19, and all the local lockdowns, have made normal trading impossible.

"As directors we have a duty to the business, our staff, our customers and our creditors to find the very best solution in this brutal environment. So we have applied to court today for a short breathing space to assess our options before moving to appoint administrators.

"Through this process I hope and believe we will be able to secure the best future for our businesses, but there will inevitably be significant cuts and closures as we work our way through this."

Despite Simpson's denials, the Bangladesh Garment Manufacturing and Exporters Association (BGMEA) in June threatened to blacklist the retailer over unpaid invoices.

Older customer base

Pippa Stephens, retail analyst at data and analytics company GlobalData, notes the Edinburgh Woollen Mill group's reliance on older customers will have exacerbated its struggles throughout the Covid-19 pandemic, as these shoppers remain the most cautious about returning to physical retail locations.

"Furthermore, while younger consumers have retained some desire to purchase fashion items, Edinburgh Woollen Mill's shoppers will have fewer reasons to buy new clothing as many will continue to shield until the virus has been significantly suppressed, making the retailer's range largely redundant," she adds.

"Out of the group's brands, Peacocks is likely to be the most desirable to potential buyers, as it is the largest fascia, with its UK clothing market share forecast to remain stable at 0.8% in 2020. Its value proposition will be appealing to consumers, since the UK's ongoing recession and increasing unemployment rates will drive many shoppers to minimise their non-essential spending for the foreseeable future. In addition, its wide range of childrenswear will also be beneficial, as this has been the most resilient clothing sub-sector throughout the pandemic thanks to the need for frequent replacement purchases.

"However, Jaeger is less likely to attract bidders, due its premium price points and focus on formalwear, which is out of favour as consumers continue to work from home. The group's core Edinburgh Woollen Mill brand will also lack appeal amongst potential buyers, as it has the greatest proportion of older shoppers."

EWM Group did not respond to just-style's request for comment at the time of going to press.