Suppliers and landlords of young fashion chain Blue Inc have expressed concern over the impending administration of the retailer’s subsidiary, A Levy & Son.
Blue Inc filed notice at the High Court on January 6 of its intention to appoint Leonard Curtis as administrator for A Levy, and sources indicate this will take place early next week.
The retailer plans to close 60 to 65 of its 232 UK shops, resulting in 500 job losses, to focus on more profitable stores and its online business.
A source close to the situation indicated Blue Inc will seek to dispose of the required leases by putting A Levy, which owns an undisclosed number of Blue Inc’s leases, into administration. The business is expected to get rid of the unwanted stores and buy back the shops within the company it wants to continue to trade.
Chief executive Steven Cohen stressed to Drapers that Blue Inc as an entire business was not going into administration, as the retailer’s trading name and brands are owned by separate subsidiaries within the business.
However, some Blue Inc suppliers will also be affected.
One supplier said: “We invoice to A Levy – it buys the stock so we will be hit by this. Luckily I have retention of title, so the damage to my business is limited but I’ve had factories in India and China calling me to ask what they should do as they don’t have [retention of title] and they will be seriously affected.”
One of Blue Inc’s landlords added: “Obviously it is disappointing when a retailer decides to go down the administration route to shed stores but our exposure is limited. We have lots of options and we are confident we can replace it, so in the long run it may be beneficial to us.”
Another source indicated that shedding the desired stores will not be “as simple as Blue Inc would like” as many landlords own both profitable and non-profitable Blue Inc shops, so could be less inclined to negotiate on the remaining stronger stores.
Like-for-like sales at Blue Inc rose 3%, while online sales increased 52% in the four weeks to January 3. However, it discounted heavily throughout the period, selling all stock for £20 or less. This week Sales prices have dropped to £10 or less.