KPMG to help embattled Jack Wills ‘assess all options’
Advisory firm KPMG is set to work with Jack Wills on a possible restructuring, amid talk of a cash crisis at the retailer. The high street clothing seller reported a multi-million loss in its most recent results, and the private equity firm which purchased it in 2016 is reportedly reluctant to put up the funds to keep it afloat.
The UK high street is enduring its most challenging period in five years. Averaging 14 closures per day in 2018, the UK saw a net closure of 2,000 stores last year. The poor trading environment has bled into this year, with a number of high street names collapsing throughout 2019.
Arguably, no sector of the high street is feeling this more keenly than fashion retail. Competition from e-commerce and declining consumer spending power have both dealt body-blows to fashion retailers. Reflecting this in 2018, fashion stores were the hardest hit in absolute terms, with a total of 104 closures in the first half of the year alone, and the segment has shown few signs of improvement this year.
Earlier in the year, this saw fashion chain Select collapse. After a sustained period of poor sales, prevailing high street conditions meant a proposed turnaround plan failed to bear fruit, and the company appointed administrators from consulting firm Quantuma. The move jeopardised the future of its 1,800 employees and its 169 UK stores.
Now, the latest business to buckle under sustained pressure in this hostile environment is ‘preppy’ fashion chain Jack Wills. Speaking to The Guardian, an industry source has claimed Jack Wills has been forced to look for buyers after its bank, HSBC, threatened to pull the plug amid reports that the retailer is facing a cash crunch, while owner Bluegem Capital Partners, which bought the retailer in 2016, was unwilling to put in new funds.
Founded in 1999 with a single store in the posh Devon resort Salcombe, Jack Wills has built upon its reputation as being an ‘upmarket’ high street fashion provider, becoming a favourite of certain affluent students and young professionals. It subsequently grew to hold 10 standalone stores in the UK and about 100 other outlets, including franchise stores in the Middle East. However, its reliance on middle class consumers has not insulated from the same woes as the rest of the market. Having recorded a £2.2 million profit in 2017, its latest available results – published January 2018 – saw the company slide to a pre-tax loss of more than £14 million.
Amid this, the troubled brand has appointed advisors from consulting firm KPMG to look at all options for its future, including a potential sale, as it suffers from a downturn in trading. KPMG recently waved away buyout interest in its restructuring unit, with KPMG’s UK Chair Bill Michael keen to maintain control of a significant fee-earning operation, as the number of companies entering insolvency in the UK booms – something which appears to be paying dividends as clients look to tap its expertise on insolvency and restructuring.
A statement from the company confirmed, “[KPMG has been appointed] to carry out a review of the business and explore future opportunities. In the meantime, management remains focused on its strategy of new product development, improving margins and driving cost efficiencies, which is already reaping benefits.”
