Edinburgh Woollen Mill Group calls in administrators, putting 24000 jobs at risk

By guest author Sahar Nazir from Retail Gazette

  • Edinburgh Woollen Mill Group owner Philip Day drafts in FRP administrators
  • The retail group said the Covid-19 lockdowns continued to impact sales
  • It also said it has been heavily impacted by allegations of unpaid bills
Caption courtesy by Retail Gazette

Edinburgh Woollen Mill Group owner Philip Day has called in administrators, putting around 24,000 jobs across his retail empire at risk.

The company – which owns Peacocks, Jaeger, Edinburgh Woollen Mill itself, and several other high street chains – has lodged a notice of intention to appoint administrators to look for potential buyers to shore up its business.

EWM Group executives wrote to staff on Friday to warn them that the national and local Covid-19 lockdowns had impacted sales across its fascias.

The firm added that it has been heavily impacted by allegations of unpaid bills, which it denies.

EWM was recently accused of failing to pay its suppliers GBP 27 million in bills by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), a trade organisation representing some of EWM’s Bangladesh-based suppliers.

However, following EWM chairman John Herring’s call for an investigation into how the figure of the unpaid bills was released to the media, BGMEA chair Rubana Huq responded to a previous letter from Herring to clarify that EWM Group has paid its suppliers “to a considerable extent”.

Huq added that the amount owed was less than what was originally circulated.

Billionaire businessman Day is now working with insolvency specialists at FRP to spend 10 days carrying out an urgent review of his retail empire ahead of further action.

Stores will continue trading and further details will be announced in due course, EWM Group said.

However, changes are expected to take place in due course.

“Like every retailer, we have found the past seven months extremely difficult,” EWM chief executive Steve Simpson said. “This situation has grown worse in recent weeks as we have had to deal with a series of false rumours about our payments and trading which have impacted our credit insurance. Traditionally, EWM has always traded with strong cash reserves and a conservative balance sheet but these stories and the reduction in credit insurance – against the backdrop of the initial lockdown, current local lockdowns, and the second wave of Covid-19 reducing footfall have made normal trading impossible. As directors, we have a duty to the business, our staff, our customers and our creditors to find the very best solution in this brutal environment. We have applied to court today for a short breathing space to assess our options before moving to appoint administrators. Through this process I hope and believe we will be able to secure the best future for our businesses, but there will inevitably be significant cuts and closures as we work our way through this. I would like to thank all our staff for their amazing efforts during this time and also our customers who have remained so loyal and committed to our brands.”

An FRP spokesman said: “Our team is working with the directors of a number of the Edinburgh Woollen Mill Group subsidiaries to explore all options for the future of its retail brands Edinburgh Woollen Mill, Jaeger, Ponden Home, and Peacocks.”

In recent weeks, EWM has received a number of expressions of interest for various parts of the group and these are being assessed along with all other options.

At the end of this process, the group will appoint FRP Advisory as administrators who will carry out the necessary restructuring of the wider business.

On Thursday (Oct. 8) EWM said the sale of its Peacocks fascia was at jeopardy due to the allegations surrounding unpaid bills to its suppliers.

Day brought in advisers to size up its Peacocks chain last month, following an unsolicited approach.

www.ewm.co.uk

www.retailgazette.com