On June 9, Monsoon Accessorize fell into administration, blaming the impact of Covid and adding that the subsequent lockdown since late March made the business unviable. Simon almost immediately bought the retailer out of administration, via a pre-pack administration deal, and said there would be an immediate loss of jobs and 35 store closures. Monsoon Accessorize will be working with Harper Dennis Hobbs to secure new leases with landlords and reopen stores as quickly as possible.
Lockdown has seen footfall decrease dramatically on the high street, and Monsoon and Accessorize have emerged as just one of many examples that have not been able to cope with the sudden dry-up of in-store customers.
With the effect of coronavirus bringing a sudden stop to trade on the high street, high overheads such as leases, and increased global competition via online shopping services have been the downfall of many retailers.
While executives said that both Monsoon and Accessorize were trading well prior to the pandemic, neither could withstand the impact of closing for three months, which may suggest a fundamental lack of agility to react to changing consumer behaviour, both in terms of journey and choice. Catherine Erdly, founder at business consultancy firm The Future of Retail, agreed. She added that the retailer was facing problems prior to the pandemic — the main one being the increasing need to remain relevant.
In October its auditors from BDO cast further doubt on its financial viability by suggesting that covenants were expected to be breached. Michael Mulligan, insolvency partner at law firm Shakespeare Martineau, agreed. Retailers are forecast to continue going under over the coming months, even after lockdown restrictions are eased, meaning landlords are increasingly at risk of being left with vacant buildings.
The retailer may also need to see an improved product range while retaining the influence of s Asian-inspired fashion. If lease terms cannot be restructured sufficiently to make stores viable it is only logical that loss-making stores should be closed, and its high street presence scaled back. There is no point acquiring a business out of administration without addressing the issues that saw it fail in the first place. Either way, Monsoon Accessorize may not be the last retailer to enter administration as a result of Covid More and more retailers are coming to terms with the harsh reality from the impact of the pandemic and are recognising that restructuring is unavoidable.
I like their bags which are good value but they appeal to a younger market now. The clothes are dated and poor quality and so mid market that for the price they are like Debenhams and M and S.
The same with the bags. I prefer quality and will pay the price so long as it lasts rather than cheap and cheerful.
Having dual stores was also a mistake. Why should they waive their rent. One source reports that a move could take place as early as Friday, with FRP Advisory lined up to handle the process. A sale of the business has been ongoing for the past two months and talks with a small number of prospective buyers continues.
Mr Simon is said to be planning to lodge a bid to buy back a restructured version of the business if it falls into administration. If landlords refuse the deal it is likely these stores will be closed. The company is not a stranger to restructuring deals…less than a year ago it received approval from landlords for a Company Voluntary Arrangement CVA.
The CVA included of its shops having their rent bills cut and 40 being permanently closed. Adena said it would now enter into talks with landlords to see if they can agree on terms to reopen stores once the lockdown is lifted.
I would like to thank landlords for the helpfulness and enormous forbearance they have shown so far, which has enabled us to get to this point. We believe that fashion has a future on the high street, and we are prepared to commit time and money making it work. Browse the archive of more than 55, articles, access bespoke in-depth research, read the daily and weekly newsletters in full, receive the print magazine optional , and gain priority access to Drapers events.
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