Brands stocked in JD’s struggling young fashion chain Bank were “not surprised” the retailer decided to offload the loss making fashion business, but have concerns over the payment of outstanding bills.
JD Sports announced today that it had sold its young fashion business Bank to a subsidiary of Hilco Capital, in order to focus on its sports fascias. Brands stocked by Bank told Drapers the sale had been on the cards “for months”.
One sales manager of a womenswear brand said: “We are not surprised. We knew they had plans to close some shops and they had been struggling with sell through. We haven’t heard from JD yet and we will need to speak to them to square off outstanding bills.”
Another brand owner said: “I’m a bit worried at the moment. We have a delivery going in tomorrow, but I am reluctant to send it until I find out what’s happening.”
One former stockist said: “It is two year overdue. It’s such a shame that they didn’t see the signs. The buyers were very, very inexperienced, the good ones left a long time ago and it looks like Bank was plugging a gap and haemorrhaging money and customers at the same rate. It must be sad for Andy Scott [Bank founder] to see this, he made gold and today he’s looking at dust.”
A statement from Hilco Capital said it was working with the management team, led by Bank managing director Gwynn Milligan, to review the business.
“The business has been heavily loss making in recent years and Hilco has hired an external interim chief risk officer to work alongside the existing management team in order to complete a rapid review of the business to determine the most appropriate strategy for the company.”
One source said the new owners are set to invest in Bank and all creditors will be paid in full.
But an observer close to the situation said: “It was very difficult for the Bank staff to make a statement as there was too much of a brand cross over with Scotts. [Hilco] will liquidate the little assets Bank has and put it into administration, 100%. If JD couldn’t make it work how can they?”
Another source added: “They (Hilco) will immediately start to close down non-profitable stores and will liquidate as much stock as possible to make it profitable before they sell it on – or they will liquidate stock, sell the stores, strip it out and put it into administration.” He said Hilco seldom keeps a company, makes it profitable and trades it, as it did with HMV last year.
Operating losses in the JD Sports group’s fashion division increased from £6.8m in the first half of 2013 to £8.2m for the 26 weeks to August 2, 2014.
Executive chairman Peter Cowgill said: “We have decided that we must prioritise future investment in the sports fascias and consequently we believe that the sale of Bank is in the best interests of the group. We shall continue to support the broadest possible range of fashion brands within the group.”
Cowgill dismissed industry rumours that he was gearing up to sell the young fashion chain in September. At the time he said: “We will continue to invest in those areas showing signs of growth, like womenswear. Bank will be getting more investment.”
In September 2013, JD announced a turnaround plan for the troubled chain and former JD chief executive Barry Bown said he hoped to see Bank sales beginning to recover by spring 14. Former Reiss trading director Gwynn Milligan was drafted in as managing director in July last year.
Republic co-founder Carl Brewins joined Bank as commercial director last November, but left in May.