Alshaya, the franchise owner of La Senza in the UK, is set to lose £63.4m after administrators failed to find a buyer for the lingerie business.
La Senza will now cease trading in the UK, with the remaining 22 stores earmarked for closure over the next two months. Some 253 staff will be made redundant.
Out of 55 shops, 33 have already shut since the retailer fell into administration in July.
Middle Eastern retail group Alshaya, which acquired the UK franchise through a pre-pack administration deal in January 2012, will lose the £63.4m the business has racked up in debt.
Unsecured creditors, which include property and logistic firms, are expected to get back between 1% and 5% on the money they are owed, which stands at £544,192.
In the year to December 31, 2013 La Senza made a pre-tax loss of £24m. This followed a pre-tax loss of £26.2m in 2012. The administrators expected a loss of £25m in 2014.
The administrators are now looking to sell the business’s remaining property estate and Drapers understands that footwear retailers Dune and Russell & Bromley have signed for two former La Senza stores on Oxford Street.
Maureen Hinton, global research director at retail analysts Conlumino, said the lingerie sector was particularly difficult for specialist retailers in the middle market.
“La Senza falls into that middle market,” she explained. “Consumers are more likely to go to department stores for premium brands or Primark for lower-priced lingerie. If you have lots of locations it’s difficult to sell the volume you need to cover all the costs of rent, rates and staff. The specialists which are doing well, like Figleaves, are mostly online players so cut down on these costs.”
Retail analyst Nick Bubb said La Senza’s owner and supplier Limited Brands may have added to the chain’s demise as it is said to have focused on its other lingerie business, Victoria’s Secret.
“Things have got a lot more competitive because of Primark, the supermarkets, and online competition but Theo [Paphitis] has done OK with Boux Avenue - after a slow start - and Victoria’s Secret seems to have been a big success in the UK. Perhaps the latter is the key to [La Senza’s demise], with the owner and supplier Limited Brands preferring to focus on that and not La Senza,” said Bubb.
Victoria’s Secret will add to its seven UK stores in November with the opening of a 12,000 sq ft store in a former Dixons XL unit in Birmingham’s Bullring, with another expected to follow at Westfield London.
La Senza continues to operate more than 150 stores across Canada and 330 through its franchise-operated business in more than 30 other countries. These are unaffected by the UK administration.