Moorfields Advisory appointed to administrate Hawkin’s Bazaar
UK toy retailer Hawkin’s Bazaar has collapsed into administration for the second time in the space of a decade. Moorfields Advisory will oversee the process, having fulfilled the same role when a similar fate befell Toys R Us two years ago.
Founded in 1973, Hawkin’s Bazaar operates 20 stores across UK and Ireland. The brand, which specialises in novelty gift items and toys, has been struggling to make ends meet since the fallout of the 2008 financial crisis – with changing ownership models and declining fortunes for high streets both taking a toll on the firm.
Hawkin’s Bazaar first attracted the attention of private equity investors in 2006, when Primary Capital bought up a 50% stake in its parent company, Tobar Group, for £42 million. Soon after, the global recession sent shockwaves through the global economy, and by 2011 Hawkin’s Bazaar was on the brink of folding. Primary Capital leveraged the firm’s collapse into administration to buy up the rest of the retailer’s stock.
Five years later, in 2016, Primary Capital took steps to offload Hawkin’s Bazaar, which then had 40 outlets and a turn-over of some £23 million a year. Another private equity player, Merino, then took on the business, giving some at the company hope that the new ownership would expand the business. Four years later, it is apparent that this is not what happened.
With the company’s store-count having halved, Merino placed Hawkin’s Bazaar’s remaining assets up for sale in August 2019, with the company having reported a £978,344 loss on sales of £15.3 million in 2018. Less than half-a-year later, following a challenging Christmas period along with the rest of the UK high street, the retailer has been placed into administration for the second time since 2011 – placing 177 jobs at risk.
Tom Straw and Simon Thomas from Moorfields Advisory have been appointed as joint administrators of the retail chain. Despite entering administration, Moorfields said that stores will continue trading “until further notice”, though the majority of stock will be subject to clearance discounts and other promotions.
Commenting on the news, Straw said, “Hawkin’s Bazaar is a retail brand with a strong heritage both on the high street and online. Unfortunately, despite making changes to their offering to appeal to the shift in modern buying patterns, the retailer still struggled to compete with online retailers such as Amazon etc.”
While e-commerce continues to be cited as the leading cause of high street administrations, however, there are other trends at play which seem to have hastened the demise of many brands. The decline in consumer spending power in the UK and Ireland has not helped, with many potential customers of companies like Hawkin’s Bazaar still earning less in real terms than they did before the 2008 crisis. Meanwhile, a growing number of cases of insolvency in the retail sector involve private equity take-overs preceding rapid declines in fortune – either due to asset stripping, or being over-encumbered with debt by their new owners.
Recently, this saw department store Beales put plans in place for an administration, as in just one year since private equity invested in the firm, its losses more than doubled to £3.2 million in the year to March 2019, while sales remained steady at £48.3 million. In 2018, meanwhile, Moorfields was again called upon to execute an administration in the toy retail space. Toys R Us collapsed as a long-term result of being taken private in 2005 by a consortium of buyout funds that loaded the company up with $5 billion of long term loans, which forced the chain to spend more than $250 million on debt service alone.
