Troubled menswear chain Blue Inc has revealed it will close 74 of its stores today after placing its subsidiary into administration.
The closures will result in the loss of an estimated 580 jobs. Blue Inc disposed of the leases by placing its subsidiary, A Levy & Son, which owns an undisclosed number of Blue Inc leases, into administration. It filed an intent to appoint administrators earlier this month.
Eight of the 74 stores were chosen because their leases were up for renewal, while the others were based on poor performance.
Blue Inc’s remaining 158 stores will continue to trade after the retailer bought the leases out of administration, saving 1,500 jobs.
In a letter seen by Drapers, A Levy & Son said: “The company [A Levy & Son] had suffered a sustained period of trading losses, which has resulted in a significant funding requirement for the business to continue to meet wages and other creditor payments.
“In addition, trading conditions remain difficult in the clothing sector caused by the unseasonably warm autumn/mild winter.”
Chief executive Steven Cohen told Drapers: “The board felt this was the best decision. Casualties like the redundancies are hard of course, but this streamlining was needed to ensure the strength and profitability of the business for the future.
“We are doing our best. It is very tough in our market at the moment - look at USC, Bank and Ark. The vast majority of stores were retained and that, combined with online, is our bedrock for the future.
“We looked at the performance of each [Blue Inc] store and weighed that up with rent and rates. High rates have had a significant impact on our business teamed with the dominance of online and the mild weather this December.”
Drapers understands some suppliers have been affected and Blue Inc has ended its relationship with some of its previous partners as a result of the administration.
Cohen said: “The business is continuing to speak to suppliers and negotiate to ensure happy relations going forward.”
Blue Inc staff expressed their dismay this morning at the sudden announcement.
One part-time member of staff at its Cheltenham store in Gloucestershire said: “I received a phone call this morning from my manager to say the store had simply been closed and keys had to be handed over. No warning this was going to happen. Unfortunately our lease was up this month.”
Craig Dodd, a general store assistant at the chain’s Liverpool St John’s store branch, said: “I knew about the company struggles through the internet. All the hard work we’ve put into our stores over last year and Christmas and we’ve been told absolutely nothing on our stores closure, apart from being phoned up today.”
Another member of staff told Drapers: “It was obvious something was going happen as we had no new stock for weeks before Christmas and the Sale prices kept being reduced. They then put a number of stores on £10 and even £5 or less, which led most staff to believe they would be the ones closing.
“For a few weeks now we have been left stressed, worried and unsure who is going to keep their job.”
Last year Blue Inc put its plans to float on hold and instead raised £4m in funding from the Unicorn Venture Capital Trust. The retailer recently reported that like-for-like sales had increased 3% in the four weeks to January 3.
As well as its UK stores, Blue Inc has four branches in Estonia, Latvia and Lithuania. It had been planning to open more in Russia and the Middle East.