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East to close 19 stores after pre-pack deal

Womenswear chain East is to axe 155 jobs as it closes 19 stores and five concessions following a pre-pack administration deal organised over the last few weeks.

The business was bought on June 22 for an undisclosed amount by East Lifestyle Limited, which is believed to be owned by Fabindia.

Fabindia has been a majority owner of East since 2012.

Geoffrey Bouchier and Philip Duffy, managing directors at Duff & Phelps, had been running East Limited as joint administrators for the past few weeks.

The reduced company will operate 82 stores and concessions, as well as east.co.uk, accounting for 550 jobs. The management team will continue to be led by Suzi Spinks, who has been with the company since 2007, when she joined as retail and HR director. She was appointed chief executive in February 2012.

The 19 stores to close immediately are in Belfast, Brighton, Carmarthen, Cheshire Oaks, Exeter, Glasgow, Harpenden, Hereford, Inverness, Jersey, Kendal, Marlow, Morpeth, Richmond, Southampton, Southport, Wilmslow, Windsor and Witney.

Concessions will close at Clerys Dublin, McEwans of Perth, Barbours of Dumfries, Austins of Newton Abbot and Quadrant Chelmsford.

Employees affected by the closures have been contacted individually.

Verdict senior retail analyst Honor Westnedge said the move had not come as a surprise. “East has a niche audience due to its design and handwriting so it had far too many stores.  Closing shops is a sensible strategy and there is the potential to close even more in order for East to get back on its feet. The retailer also needs to dilute its handwriting to appeal to more people, its product offer needs to appeal to a larger audience,” she added.

In a statement given to Drapers, the management team of East said: “In taking this hard decision we have secured the future of the business and placed it on a sustainable footing. Unfortunately a number of colleagues are affected by the store closures, and we would like to thank them for the hard work they have done for East. The sale process underlines the value of our brand as we focus on balancing our high street footprint with our rapidly growing online sales.”

In its most recent financial results for the full year for March 29 2014, East recorded an operating loss of £712,300, down from a £1.5m loss the year before.

Turnover fell 2% to £39.7m, though like-for-likes rose 0.2%. Sales in the UK were £38.8m, down from £44.3m the year before.

@Drapers

Readers' comments (6)

  • Disgraceful! Fabindia own it and now can get rid of its debts and still own the smaller slim line business. Disgusting!

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  • Pre-pack administration is legal. Just. Great way to get out of store lease contracts.

    A very bad outcome for those owed money. The rhetoric of the 'sales process underlining the value of the brand' is less convincing. Pre-packed administration is normally advertised to get best price. So nobody else wanted to buy it?

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  • Stitch-Up. They deserve no respect.

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  • They wreck a business due to greed then shaft everyone and still get to own the business, stock bought at probably less than market value, an absolute disgrace, they should be banned from running a business

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  • Other people were lined up to buy it which makes this even worse!

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  • lets see who supplies them?

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