Beales poised for administration after KPMG review

Around 1000 jobs have been placed at risk, as department store Beales has warned it could collapse into administration without a new owner. The news comes a month after Big Four firm KPMG was appointed to undertake a strategic review of the business.

The UK’s retail sector faces a stormy 2020, with flagging economic growth and poor consumer confidence having already wrought havoc on the high street throughout the last year. Overall, British retail is currently experiencing its worst levels of growth since 1995 as a result.

Amid this continued state of disarray, Beales has become the latest long-standing high street brand to find itself on the ropes, financially speaking.  The English department store chain, currently operating 22 branches, has been doing business since its flagship store, Beales in Bournemouth, was established as The Fancy Fair by John Elmes Beale in 1881.

In October 2018, Beales was sold in a management buy-out (MBO) to group chief executive Anthony Brown. As with most MBOs, the sale was backed by finances from private equity, and as is common in a growing number of cases involving private equity take-overs in the retail space, Beales has since been beset by financial difficulties. Pre-tax losses more than doubled to £3.2 million in the year to March 2019, while sales remained steady at £48.3 million – leaving the business’ net current debts at £15.8 million.

As it struggled to get a handle on the situation, Beales in December appointed KPMG to conduct a strategic review of the business and to examine different options for refinancing. As reported by the Guardian, the advice KPMG was asked for included “strategic and financing options,” such as a sale of the whole company or its subsidiaries.

Now, a month later, the company has announced it is on the brink of collapse unless it can find a new owner to buy the business. Some 1,000 jobs are now at risk across Beales’ 22 locations, as the retailer has filed notice of its intention to appoint administrators.

Group CEO Anthony Brown told the Daily Echo, “We are confident that we have a solution for the business that will create a stronger if leaner Beales. It is difficult trading on the high street. The difficulties are exacerbated by the lunacy of the business rates system.”