Creditors of LK Bennett have been left unsure as to whether they will receive any money owed to them after the retailer went into administration last week.
LK Bennett appointed Dan Hurd, Hunter Kelly and Craig Lewis of accountancy firm EY as joint administrators of its UK business on 7 March. Its international operations are not included in the administration.
There will be 55 redundancies across the head office and five store closures in Meadowhall in Sheffield, Bristol, Liverpool and Brent Cross and Westbourne Grove in London.
The company employs 480 staff in the UK across 39 stores and 37 concessions – most of which are still trading – and its London head office.
One supplier said the administration had been in the pipeline “for a few months”: “We have known for a while that they had ongoing issues. We are now an unsecured creditor and we are owed money. Most suppliers don’t get paid anything as an unsecured creditor.
“I have no idea what will happen because we are still waiting for an official notification from LK Bennett. There has been no indication from the company about what its intentions are.”
Another supplier added: “We have not heard anything official since LK Bennett sent us an email over a week ago to say that everything is on hold. We’ve been left in the dark about the situation.”
Property costs were a significant financial drain on the company. Property services firm Colliers International estimated that the retailer’s business rates bill has risen 26% for 37 stores following the revaluation in 2017. It calculated the total rates liability to be around £3.4m for 2018, compared with £2.7m in 2016/17 (table below).
LK Bennett’s London stores with biggest business rate increases
|Store||Business rates 2016/17||Business rates 2019/20||Increase|
|Jubilee Place, Bank Street E14||£54,800||£93,800||72%|
|Great Eastern Street, EC2||£43,000||£70,400||64%|
|St Pancras International station, NW1||£61,000||£186,300||205%|
|Westfield London, W12||£74,500||£149,500||101%|
|Brook Street, W1||£139,590||£251,500||80%|
Source: Colliers International
The largest increases were in London. The rates for the shop in St Pancras International station is predicted to more than triple, rising 205% from £61,000 in 2016/17 to £186,300 for 2019/20.
Head of rating at Colliers International, John Webber, said: “Increased business rates are not the only factor in the difficulties facing retailers such as LK Bennett, but for some they are that extra cost that takes the company over the edge. And if not the only reason why such shops are closing, they are, perhaps equally worrying, a reason why some shops will stay empty for some time in the future, as potential occupiers shy away from committing to these increased costs.”
Jonathan De Mello, head of retail consultancy at property advisers Harper Dennis Hobbs, warned that around half of LK Bennett stores could close.
He added: “The five stores LK Bennett has already announced closures for are in quite expensive locations. It is likely the next stores to close will be in expensive locations and malls that have very high rents and business rates. LK Bennett has to be in among stores that are complementary. Its core customer is around the south-east, in quality suburban locations.”
Another source at a retail property firm agreed: “It is quite clear that LK Bennett will be looking at closing malls in expensive regions. I imagine it will try to retrench into bespoke, upmarket locations.”