Deloitte to oversee Office Outlet administration
Over 1,000 jobs have been jeopardised by the news that UK stationary store Office Outlet has been placed in administration. Big Four firm Deloitte has been appointed to oversee the company’s insolvency, with the company’s 90 stores continuing to trade while a buyer is sought.
Attempts to avoid yet another British high street collapse seem to have failed, with Office Outlet appointing administrators in March 2019. The chain had previously launched a Company Voluntary Arrangement (CVA) just six months ago, but while the controversial insolvency measure allowed it to restructure debts and strike a three-year rent-free deal for 20 of its 90 shops, the firm has still collapsed.
In the latest sign of industry stress on Britain's high streets, the retailer yesterday drafted in administrators from accountancy firm Deloitte. The news sees some 1,200 jobs put at risk, along with throwing the future of 90 stores into doubt.
Office Outlet is the latest in a small but growing cadre of failed private equity-backed retail firms led most notably by Toys R Us, which liquidated its iconic stores in 2018. Similarly, teen fashion retailer Claire’s fell into administration not long after it had been acquired by private equity owners – loading the firm with debt which it could not support.
Formerly known as Staples, Office Outlet was rebranded following its purchase by Hilco Capital in late 2016. Hilco now controls a minority holding, with a management buyout conducted in September last year that was led by chief executive Chris Yates. Now, Office Outlet looks set to close a swathe of stores, following the launch of huge sales and announcing its administration on its website.
According to Deloitte, the firm succumbed to continued turbulence in the broader UK retail sector, which has seen declining demand thanks to stagnating wages, while being hit by increased import fees due to the poor health of the pound. Office Outlet is now being marketed for sale, though its stores will keep trading whilst a buyer is sought.
Richard Hawes, joint administrator, commented, "In addition to a general downturn in trading as a result of the on-going decline in the stationery market and UK retail in general, the company has recently experienced a reduction in credit from key suppliers, given the economic outlook which has severely impacted the financial position of the company...We are hopeful a buyer can still be found for the business in the coming weeks and we will continue to trade the business with that aim in mind."
Office Outlet Chief Executive Chris Yates said, "Over the last two years the business has been transformed from the heavily loss-making old Staples business to a near breakeven modern multichannel retailer. However, additional growth capital was required to continue delivery of the next stage of the management buyout business plan. Despite being highly impressed by the Office Outlet story potential investors have held back due to retail sector sentiment and the general level of uncertainty."
