AN iconic British fashion chain with 86 stores is considering a ‘wave of closures’ amid a continued high street struggle.
Authentic Brands Group (ABG), which owns Ted Baker, is exploring several cost-saving measures to shore up the company’s “soaring” costs.
AlamyTed Baker operates hundreds of stores worldwide and currently operates out of 86 locations in the UK[/caption]
It comes just two years after ABG rescued the high street brand as part of a £211million deal following mounting losses.
ABG was founded by retail turnaround specialist and Canadian billionaire Jamie Salter and owns nearly 40 fashion, sportswear and celebrity brands, including Reebok.
The group is now said to be appointing experts to oversee a restructuring as it seeks to significantly reduce a punishing rent bill on scores of Ted Baker’s UK stores, according to The Telegraph.
It is believed consultants at Teneo are favourites to lead the negotiations.
A city source told The Telegraph on Saturday: “Ted Baker is one of the few big high street retailers that is yet to reset rents to reflect current market rates. It is hugely over-rented.”
One of the cost-saving measures that ABG is expected to look at in detail is a Company Voluntary Arrangement (CVA).
A CVA doesn’t indicate that a company has gone bust.
Instead, it allows firms that have run out of cash to look at ways to save the business, such as reducing rent rates with landlords.
Companies often agree to a CVA to avoid insolvency, which can lead to closures or the whole business going bust.
ABG and Ted Baker have been contacted for comment.
It’s not the only high street brand considering various cost-saving options.
Last week, it was reported that troubled fashion brand Superdry is considering a major restructuring, including store closures and job cuts.
Sky News reported last month that Superdry is working with PwC advisers on a plan that could lead to a CVA (company voluntary arrangement) or another form of restructuring.
But on Friday, it was reported that Superdry’s chief executive Julian Dunkerton is also in talks with Rcapital and Gordon Brothers about a bid to take the embattled British fashion retailer private.
Last year, Wilko was considering entering into a CVA, it then shuttered all 400 of its shops after falling into administration.
Back in 2019, card shop Clintons reported it was considering a CVA, it then told landlords it urgently needed to close 66 stores.
Mothercare carried out its first CVA in 2018, which resulted in a plan to close 55 shops – putting 900 jobs at risk.
The shoe shop Office also considered entering into a CVA amid struggles.
In 2020, coffee chain Caffe Nero launched a CVA to restructure its business and avoid store closures and job losses.
Retailers have been feeling the squeeze since the pandemic, while shoppers are cutting back on spending due to the soaring cost of living crisis.
High energy costs and a move to shopping online after the pandemic are also taking a toll, and many high street shops have struggled to keep going.
The high street has seen a whole raft of closures over the past year and more are on their way.
Several major brands have also collapsed, such as Wilko and Paperchase.
Many retailers have been struggling to get by, especially during the Covid-19 pandemic.
Energy costs have risen, and more shoppers than ever are choosing to order online rather than head into stores.
This has left some retailers grappling with budgets and have no choice but to close stores to cut costs.
British retailers saw the amount of goods they sold drop last month at its fastest rate in three years as under-pressure families shifted part of their Christmas shop to earlier in the year.
Sales volumes dipped by 3.2% in December, data from the Office for National Statistics suggests, down from a rise of 1.4% a month before.
Several big-name chains are pulling down the shutters for the final time this month.
Lidl will be pulling the shutters down on its site in Thornaby next month.
The bargain retailer has confirmed the sites in Stockton-on-Tees will shut on February 29.
Boots revealed it would be closing 300 stores over the next year as part of plans to evolve its brand.