News has broken that this week high street fashion chain Ted Baker is to close 15 UK stores and cut 245 jobs.
As of 19th of April 11 of those 15 stores will shut and 120 jobs will be lost. In addition, 25 head office roles will also go, in an attempt to reduce costs.
This all comes after the company behind Ted Baker’s UK stores, ‘No Ordinary Designer Label Limited’ (NODL) collapsed last month.
However, this shouldn’t come as a surprise, not only given the business’ run of challenges - such as changes to leadership in recent years and a shift towards remote working impacting ‘office fashion’ - but perhaps more importantly the economic climate many businesses across the UK find themselves in.
A number of Britain’s beloved brands are finding themselves on the brink. We only have to look at The Body Shop’s collapse into administration last month and luxury kitchen designer Harvey Jones’ close call, before the rescue deal.
Why are businesses on the brink?
While the British Retail Consortium found this week that Easter spending, has lifted retail sales by the most since August there’s still stormy times ahead.
Currently, businesses are trading against the economic backdrop of tighter lending and higher cost inflation while Britain’s wider economy is showing sluggish growth.
In fact, according to data from The Gazette Official Public Record, a total of 1,641 businesses, 239 of which came from the retail sector, filed for administration last year.
Retail, construction, hospitality, manufacturing, and real estate were the worst-hit sectors, collectively accounting for 59% of the administrations, with retail alone accounting for 19% of administrations in 2023.
While there are several factors at play, including the continued impact of the pandemic, cost inflation and a shift in consumer spending are the major influences here.
Long has there been debate around the future of the high street and demise of the department store. While brands such as Ted Baker would have once been readily available in department stores like Debenhams, this revenue stream has decreased significantly, meaning the brand must rely on its own bricks and mortar stores and ecommerce channels.
Rent prices, energy bills and increases in salaries will undoubtedly have been triggers for the brand’s demise too.
NODL licenses the Ted Baker brand in the UK and Europe from Authentic Brands Group (ABG), the brand management group which owns Reebok amongst other well-known brands. ABG has said that NODL ended up with a “significant level of arrears” run up under AARC, the Dutch firm hired to run Ted Baker’s UK and Europe stores, and operations.
Now time is of the essence to help secure the future of the brand, with a few key players already having voiced their interest.
While there’s still an opportunity to save the British institution, the earlier interventions are taken the more solutions there are.
And with any rescue mission, there’s more than a few fires to put out – but it’s doable with the right legal team on hand, if you instruct them with enough notice.
An effective law firm will prove key in helping to manage a buy-out, re-negotiating funding terms, working closely with management to support them through a restructure and working closely with private equity investors and a potential buyer.
They can also help with sculpting an effective communication strategy, to help build trust back in the brand – not only for investors but for the workforce and consumers.
A communications strategy would have been critical in 2019, when Ted Baker’s former CEO Ray Kelvin departed due to misconduct allegations, triggering a flurry of changes within the leadership team.
Many will look at boarded up shops and reports of administration and declare death of the high streets. Coupled with the current economic climate where tighter lending and cost inflation is impacting everyone, businesses may have reason to worry.
But we’re in a transition period and with any change, navigating it well is critical. This means anyone trading must be more conservative, constantly assessing where and how they're making money and ensuring there are the right measures in place to reduce risk.
Finding the right legal partner with experience in financial distress and restructuring is pivotal to this, and to ensuring that businesses aren’t digging their own grave.
