Blog: Leonie BarrieRetailers can be rescued

Leonie Barrie | 23 February 2009

At last some good news for two UK retailers forced into administration because of the economic slowdown, as their former owners each step in with a rescue plan.

A slimmed-down version of Adams Childrenswear has been bought back by former owner John Shannon, who has set up a new company called JS Childrenswear to run more than 120 Adams stores. The move has also saved 1,900 jobs.

Similarly, around 3,000 jobs will be safeguarded after Michael Ziff, former chairman and chief executive of collapsed shoe retailer Stylo, led a deal that will see the firm's existing management team buy 160 stores in the UK and Ireland operating under the Barratts and Priceless brands, as well as 165 concession outlets. However, around 2,500 jobs will also be lost at the retailer as 220 stores which were not part of the deal will be shuttered.

Even so, the transactions go to show that with the right business model, retailers can be rescued from administration in the current economic climate.

Whether the same can be said of JJB Sports’ lifestyle division remains to be seen, after it appointed administrators last week and announced the closure of 45 subsidiary stores with the loss of 438 jobs. The remaining Original Shoe Company and Qube footwear stores will continue to trade while a buyer is sought.

Changes are also afoot at luxury fashion and lifestyle brand Polo Ralph Lauren, which is to take direct control of its wholesale and retail distribution in South East Asia from the beginning of next year. The decision to end a 20-year partnership with its licensee in the region, luxury retailer Dickson Concepts, follows similar moves by Polo Ralph Lauren in Europe and Japan – and is described by the company as a "significant strategic step" as it develops its business globally.

Wal-Mart Stores, the world's largest retailer, says it is performing better than its competitors and has blamed the strong dollar and a labour lawsuit charge for a  7.5% drop in fourth quarter profit. Sales at the Bentonville, Arkansas-based discounter edged up 1.7%, as a 6% rise at its Walmart US stores and flat sales at its Sam's Club operation were offset by an 8.4% drop in international revenues. Wal-Mart has continued to benefit from shoppers flocking to its stores in search of bargains – although demand for grocery and health and wellness products has outstripped apparel sales.

 


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