The upmarket fashion chain LK Bennett is preparing to appoint administrators after its owner struggled to find a new financial backer for the loss-making retailer, putting almost 500 UK jobs at risk.
Famous for its signature kitten heels, which start at £175 a pair, the company was founded by the entrepreneur Linda Bennett, who opened the first store in Wimbledon, south-west London, in 1990. She sold control of the business to a private equity firm in a blockbuster deal in 2008, but in 2017 returned as a consultant after it started to struggle – and a short time later bought the company back.
In an email to staff, Bennett said she had “fought as hard as I can … to turn the business into the success that I know it deserves to be … These are difficult and unstable times, and we are doing everything we can to identify the best way forward.”
Last month it was reported that Bennett was casting around for new backers, but on Friday it emerged that the company had filed notice of intention to appoint an administrator.
The court document provides management with some breathing space as it prevents creditors from taking action for 10 working days. The fashion brand employs 480 people in the UK across 42 standalone stores and 54 department store concessions. It also has 47 shops and concessions across the US and mainland Europe.
EY, the advisory firm, is on standby to run the an administration process if no new investment can be found in the coming days, according to Sky News, which first reported the story. EY declined to comment.
The brand, favoured by the Duchess of Cambridge, has always described itself as bringing “a bit of Bond Street luxury to the high street”, but it has not been immune to tough high street trading as Britons cut back spending on clothing at a time when the cost of running high street stores has risen sharply.
If the retailer were to fall into administration, it would be a dramatic reversal of fortune. In 2008 it sold a majority stake to Phoenix Equity Partners in a deal said to have valued the company at up to £100m.
However, the most recent accounts filed at Companies House show the business made an operating loss of nearly £6m on sales of £77.4m in the year to 29 July 2017. At a pre-tax level, losses rose to £48m for the same period because of a corporate restructuring that involved writing off amounts owed by former group companies.
Last year Bennett, who has loaned the company more than £11m since returning, told one interviewer it was the “biggest risk” she had ever taken. “It’s a terrible time. Brexit is really difficult. Now we don’t know if we’re going to have tariffs on the shoes we’re having made in Spain. The exchange rate is worse than it’s ever been. From a business point of view, it’s a total nightmare.”
Glen Tooke, an analyst at the research firm Kantar Worldpanel, said the LK Bennett’s problems were not a surprise: “The struggling retailers don’t have a clear enough picture of who their target shopper is – sadly, this is LK Bennett.”
