Edinburgh Woollen Mill today stepped towards administration as it suffers from the effects of Covid-19 – and the way its customers’ behaviour has changed during the pandemic.
The fashion multichannel retail group, whose brands also include Peacocks and Jaeger, today filed a notice to appoint administrators in the hope of winning breathing space while it assesses the options available to it.
It says it has received expressions of interest for the group in recent week and that these are being assessed along with “all other options”. Once it has put a plan in place it will appoint FRP Advisory as administrators in order to restructure the wider business.
Edinburgh Woollen Mill chief executive Steve Simpson said: “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. 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.
“I would like to thank all our staff for their amazing efforts during this time and also our customers who have remained so loyal and committed to our brands.”
He said the decision had also been affected by false rumours that had affected its ability to get credit insurance.
“Like every retailer, we have found the past seven months extremely difficult,” he said. “This situation has grown worse 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 and the reduction in credit insurance – against the backdrop of the initial lockdown, current local lockdowns, and the second wave of Covid-19 reducing footfall have made normal trading impossible.”
Retail analyst Pippa Stephens of GlobalData, says the company’s reliance on older customers will have made matters worse during Covid-19, since these are the shoppers who are most cautious about returning to shops.
“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 ctoninue to shield until the virus has been significantly suppressed, making the retailer’s range largely redundant.”
Stephens sees most future potential for Peacocks – the largest of the group’s brands, and whose clothing market share is expected to stay stable at 0.8% in 2020. But she says Jaeger, more focused on formalwear at premium prices, and Edinburgh Woollen Mill, with its larger share of older shoppers, will lack appeal.
The Edinburgh Woollen Mill is a Top250 retailer in RXUK Top500 research, as are Jaeger and Peacocks. The EWM Group, owned by Philip Day and his family, employ about 24,000 people across the UK. Edinburgh Woollen Mill alone has about 400 shops, although not all have reopened following the first Covid-19 lockdown, while Peacocks has a similar number. As recently as January, EWM was looking to double Jaeger’s UK store numbers to 30 including a new flagship West End shop.