FRP Advisory negotiating deal between Bonmarché and Peacocks

UK retail chain Peacocks has been lined up by administrators as a buyer for the Bonmarché stores. FRP Advisory has selected Peacocks as the preferred bidder to acquire the firm, potentially rescuing the brand from collapse.

The UK retail sector bore the brunt of the sluggish growth seen across the British economy in 2019. Low levels of footfall and a decline in consumer spending power due to stagnating wages and rising inflation meant that stores saw in the year with a flurry of profit warnings.

As a result, FRP Advisory has been engaged by a number of retail outlets, keen to tap the firm’s restructuring services. Better Bathrooms, the UK’s largest independent bathroom retailer, engaged the consultancy in March, while FRP replaced KPMG as Patisserie Valerie’s administrator in the Summer.

Since then, FRP has also taken up a similar role at Bonmarché, a clothing retailer based in Wakefield, West Yorkshire. The business was founded in 1982, and quickly grew into a chain of around 300 stores, a huge headquarters at Grange Moor, with a turnover of more than £200 million. The family behind the business sold to the Peacock Group in July 2002, but by 2011 it was reported that Peacocks were looking to sell Bonmarché. By January 2012, the business has been purchased for an undisclosed sum by private equity group Sun European Partners.

What followed has become an all-too-familiar trend in global retail; a previously strong brand suffering a swift decline by private equity partners keen to turn a profit on their investment as quickly as possible. In July 2019, the company said that trading in recent months was so poor, it was recommending a £5.7 million rescue bid from the Edinburgh Woollen Mill owner Philip Day, less than three months after rejecting it. The company continued to flounder under this new ownership, however, and was placed into administration in October.

FRP was installed to oversee the process, with the administrators stating initially that all stores would remain open, while no redundancies would be made in the short-term. Now, the firm looks set to sell Bonmarché back to Philip Day via Peacocks (part of the Edinburgh Woollen Mill group), with at least 30 “underperforming and unsustainable” stores set to close in December – culminating in the loss of some 240 jobs. Some 25 head office and management roles have been made redundant during the administration process, and the company said there is “potential” for further redundancies. 285 stores will continue to trade under review.

A range of offers were submitted by parties seeking all or part of the business, and the final deadline for bids was 15 November. Joint administrators Tony Wright, Alastair Massey and Phil Pierce said the bid package from Peacocks is “the best opportunity to maximise returns for creditors and sell the business on a going concern basis”.

Commenting on the selection of a preferred bidder, Wright said, “After a robust marketing process for Bonmarché, the business attracted a range of bids. We have now begun advanced negotiations with Peacocks on a going concern basis… While we are optimistic that a transaction can be completed, ultimately, it will depend on ongoing negotiations between our preferred bidder and landlords on market rents and there remains a risk that the business could cease to trade. We deeply regret that, as part of the administration process, 30 stores will close and staff may be made redundant.”