Collapsed retailer Bonmarché has the potential to be successful again if Edinburgh Woollen Mill Group (EWM) owner Philip Day buys it back out of administration, former employees have told Drapers.
Earlier today, it was revealed that EWM-owned value retailer Peacocks is the preferred bidder for Bonmarché, which went into administration in October. It came after Day’s investment vehicle Spectre bought a majority share of the business in April, triggering a mandatory takeover bid.
The deal would result in the closure of 30 “underperforming and unsustainable” Bonmarché stores by 11 December and “potential” further redundancies. Twenty-five head office and middle management roles have already been axed during the administration process.
Product director Geraldine Higgins and chief financial officer Stephen Alldridge are among those to have left the business in recent months.
Bonmarché’s 285 remaining stores will continue to trade and the business will be kept under review as Peacocks finalises the deal with landlords.
Last month, industry experts told Drapers they thought Day had put the company into administration to “then buy it back without the debt”.
Responding to today’s announcement, a former member of the Edinburgh Woollen Mill Group said: “This was entirely predictable.
“It’s a recurring theme with Day – he did the same [bought the companies out of administration] with Austin Reed, Jaeger and Berwin & Berwin.
“By doing this [to Bonmarché] a lot of people will have lost money owed to them. However, Peacocks is highly successful, so if Day runs Bonmarché in the same way, that will be too.”
He added: “I think Peacocks and Bonmarché together will have a lot of benefits. There will be lots of cost saving having one finance department, and one marketing department, which will make it into a profitable business again.”
Another former Bonmarché employee agreed: “I think it was fairly obvious that this was what [Day] was going to do, to get rid of the debts and get rid of the unprofitable stores – in order to [make Bonmarché] profitable again.
“Many suppliers and landlords will be frustrated by what he has done. However, I think it’s a good thing that he is likely to get the business back. He will now do what he has done with other companies, which will mean minimum redundancies and not too many store closures.”
She added: “I think Bonmarché will be able to make a fairly quick comeback [under Day]. Helen [Connolly, Bonmarché CEO] now needs to work full steam ahead to turn this around.”
However, some questioned the whether deals like this should be allowed.
One value retail supplier said: “It should be against the law really, but is always the best option available according to the administrator.”
Another retail source said: “It’s legal, but I think a lot of people say it’s close to the wind and the law needs investigating.”