Streetwear brand Fenchurch has gone into administration, blaming spiralling cotton prices and labour costs.
RSM Tenon has been appointed the administrators for Fenchurch International and has placed an ad in the Financial Times offering the company for sale. The administration puts 40 head office jobs at threat.
According to the ad, Fenchurch turned over £11m in the 12 months to April 31 2010 and achieved a gross profit of 35%. It also said forecasts for 2011 and 2012 predict a 30% growth in sales over the 24 month period.
According to Companies House, Fenchurch’s 2010 accounts are overdue.
Fenchurch managing director John Cockburn said that the company has been trading well, but that rising cotton and labour costs, combined with delivery delays, had hit its margins and cashflow.
“Sales have shown continued growth over the last five year period with expected sales revenues of £11.4 million for the financial year to April 2011.
“However, profitability remains suppressed as the impact of increased cotton prices, more aggressive pricing from China and labour shortages in textiles in general, has applied pressure to gross margin opportunities in spite of higher minimum orders,” Cockburn said.
“Fenchurch has recently suffered from delays in production targets from producers in China which has in turn delayed deliveries to retailers. This, together with increased investment in back office infrastructure and increased sales volumes has put a strain on the company’s cash flow.
“It is now in need of further working capital and with no immediately available source of funding, the Directors sought the advice of RSM Tenon.”
RSM Tenon director Gareth Roberts said he anticipated a high level of interest from prospective buyers.
“The business has seen positive growth in recent years with a strong presence in both the UK and Western Europe but is in need of additional working capital. We are confident of achieving a sale of the business and assets in the near future so protecting the brand and its staff,” he said.
The London streetwear brand launched in the UK in 2002. It has four retail stores and is stocked in 35 high street and online retailers and 900 independent shops in Europe.
In September last year the brand revamped it’s branding, including a new red logo, store identity and website, to return to its skateboarder roots.