The indie department store sector was rocked this week as the future of Vergo Retail, owner of iconic department stores including Joplings in Sunderland, Robbs of Hexham and Derrys in Plymouth, remained on a knife edge.
Sources told Drapers the 20-store business, which hit the buffers last week due to cash flow problems and poor trading conditions, will struggle to secure a buyer because of undesirable rental terms and the weakened reputation of many of the stores.
Nine loss-making stores, including four department stores and four fashion stores, will be shuttered within four weeks if administrator MCR fails to attract a buyer. Lewis’s in Liverpool was scheduled to close before the administration following the expiration of its lease in June. The remaining 10 stores continue to trade.
Interested parties were still to be identified as Drapers went to press and several indie department store bosses ruled themselves out of the running to buy the business.
Many said the fact that the stores were not freehold made them less attractive. Vergo Retail managing director David Thompson, who previously rescued Lewis’s, Robbs of Hexham and Joplings when his former company Owen Owen went into administration in 2007, pursued a sale and leaseback strategy with the stores, which is believed to have put pressure on Vergo’s cash flow.
Indie department store chain Beales is likely to keep a close eye on the administration process. Beales is on the acquisition trail after shareholder and property entrepreneur Andrew Perloff upped his stake in the 11-store chain to 29.7% in February. The group is believed to be interested in leasehold opportunities, pushing it to the front
of the pack of potential interested parties. Beales chief executive Tony Brown said only that the business was looking to expand.
Indie department store group Morleys is also acquisitive and bought Roomes of Upminster last year. However, chairman Bernard Dreesmann said: “We’re not looking at any of the Vergo stores at the moment, mainly because they’re wrong for us geographically.”
Hoopers managing director Anne Horton said the group would not look at the stores because they did not fit its more premium portfolio.
Other indie department stores including the Yorkshire-based Browns group and Newbury’s Camp Hopson also ruled themselves out.
One retail source told Drapers that a potential buyer could return Robbs of Hexham or Derrys in Plymouth to profitability with the right landlord deal and a store revamp.