24,000 jobs in danger as Peacocks and Jaeger owner faces collapse
Billionaire Philip Day’s retail empire that includes Peacocks and Jaeger is on the brink of collapse, with 24,000 jobs at risk.
Edinburgh Woollen Mill (EWM), which also owns Austin Reed and Jacques Vert, is poised to appoint administrators at FRP Advisory if it fails to find a buyer for some or all of the brands.
Mr Day’s chains, amassed over the years and often bought from previous administrations, have more than 1,000 branches between them.
The retailer has lodged a notice of intent to appoint administrators with the High Court, which is meant to prevent creditors such as suppliers or landlords from claiming any money for 10 days before a formal appointment is made.
Chief executive Steve Simpson said that although he hoped to secure the best future for the business, there would inevitably be significant job cuts and store closures.
Bosses wrote to staff on Friday morning saying that the national and local lockdowns had hurt sales very heavily.
However, it mostly blamed a spat with suppliers in Bangladesh for its plight after credit insurers pulled cover and left the business exposed.
Credit insurance protects suppliers against the risk of customers going bust between an order being placed and the payment being made. When insurers stop or withdraw cover, suppliers can demand payment up front, putting pressure on retailers and their finances.
Suppliers in Bangladesh said in the summer they were owed millions of pounds for cancelled orders since the pandemic hit, which EWM denies. The retailer said that it was hit hard by these allegations and claims it has paid most of its outstanding debt.
Last month, chairman John Herring wrote to the Bangladesh Garment Manufacturers and Exporters Association stressing that their comments had put EWM in a “critical position” with credit insurers.
All stores will continue trading and further details will be announced in due course, the company added, but significant changes are expected.
According to legal documents, lawyers at Dentons are advising EWM.
Retailers are laying off workers at the fastest rate since 2009
Line chart with 7 data points.
Balance of retailers reporting higher rather lower employment compared to a year earlier
The retail sector is one of the industries to suffer the most as a result of lockdowns to curb the spread of coronavirus. Despite a rise in sales after restrictions ended in June, retailers have slashed thousands of jobs in bids to survive.
The move came just hours before Chancellor Rishi Sunak unveiled new plans for protecting jobs and businesses forced to temporarily close to combat rising infections.