Suitors wanted: Investors circle as Austin Reed becomes the latest retailer to tumble into administration
Austin Reed has become the second retailer to enter administration in as many days, following the collapse of BHS on Monday.
Yesterday, AlixPartners’ Peter Saville, Kevin Coates and Catherine William-son were named joint administrators of the firm, after months of challenging market conditions and cash flow problems.
Two names have emerged as potential rescuers of the 116-year-old shirtmaker, which employs 1,200 people. Sources say it could rise from the ashes with a streamlined portfolio.
Alteri Investors, which took a stake in the ailing company just a fortnight ago, is thought to be top of the list of potential suitors through a pre-pack, the controversial process whereby a buyer will have been lined up for a struggling company before administrators are formally appointed.
However, the firm declined to comment at the time of publication.
Meanwhile, Better Capital, the private equity owner of fashion retailer Jaeger, is another name in the frame.
A source told City PM that the private equity firm had cash to make the investment and “the fit with Jaeger is real”, but talks had not reached a meaningful stage.
Better Capital’s chief executive Jon Moulton told City PM he was “not disinterested” in the business, but declined to comment further.
Austin Reed’s administrators have said it is “an attractive proposition for a range of potential buyers, as such we expect, and welcome, contact from interested third parties”.
The cash-strapped group includes Austin Reed, its property subsidiary ARG, Country Casuals, and Darius Capital.
Read more: Deadline set for Austin Reed to find a buyer
City PM understands the business has struggled to keep suppliers on board in light of its financial woes, and any potential suitor would have to win back support to make the business viable once more.
A pre-pack would allow the company to continue trading while administrators quickly sell it on with any unwanted debts wiped out.
The chain, which currently operates around 100 stores and 50 concessions throughout the UK, may also return with a smaller footprint.
Property consultant GCW has been appointed to advise on the group’s real estate portfolio.
Rupert Eastell, head of retail at business advisers RSM, said: “Austin Reed should be a successful multi-channel retail business but the current management have been unable to make the brand relevant to a new generation of consumers.
“The company’s offer has been inconsistent, the ranges have been poor and the stores have looked rather tired. Perhaps most disappointingly, the website is not good enough by today’s standards.
“There is a lot of value in the Austin Reed brand and heritage so I’m convinced there’s a real opportunity for the right investor to turn things around within the next three to five years.”