Opposite outcomes have befallen Glasgow-based budget fashion chain Internacionale Retail, and West Sussex-based retailer Modelzone, which both failed to meet the years second quarter day rent payments on June 24th and filed notice of intention to appoint administrators.
Internationale UK Ltd., a new business set up by its former directors, has bought Internationale Retail following a pre-pack administration. Internacionale UK will close 18 of the 132 stores across the UK, at Ballymena, Bootle, Bristol, Cheltenham, Connswater, Doncaster, Dumfries, Grays, Grimsby, Hounslow, Hull, Lewisham, Redcar, Redditch, Sutton, Wreham, Yeovil and Woking.
This business has had a turbulent past, having been founded by Scottish entrepreneur Ken Cairnduff, who sold it on via a management buyout in 2006 to a new company, Ossian Group, in a deal valued at £45 million.
Glasgow-based Ossian Group fell into administration in 2008 after admitting it would not meet its rent and service charge obligations, but was then rescued by an Indian textiles and retail conglomerate, S Kumar Nationwide.
The company's most recent full-year results for the year ending July 24, 2011 show a loss of £15.4 million. Investors were reported to have put £9.4 million into the business as part of a wider turnaround strategy.
Joint administrator Tom Jack, commented: “The high st fashion clothing business has been significantly loss making over recent years and although the directors have sought to restructure and reposition Internacionale, with significant cash investment from shareholders, it has not proved possible largely because of the high fixed costs of the business. This has resulted in the retailer being unable to continue to operate outside of administration.”
He added: “However, we are pleased to announce that a sale has been completed that sees the majority of the Internacionale business, including 114 of its stores, its head office and its finance operation, being sold to Internacionale UK Limited.”
Ernst & Young said 114 of Internacionale’s 132 stores, head office and finance operation had been acquired by the new business. The remaining 18 stores will close immediately and all 1,550 staff at the company have also been transferred over.
The outcome at Modelzone could not have been more different. An old established model retailer had become Modelzone in 1987 and was previously owned by Norwich-based Tobar Group, also the parent company of Hawkin’s Bazaar. Founder David Mordecai had sold the business to an MBO backed by Lloyds venture capital arm, Lloyds Development Capital.
The new owners had embarked upon an expansion of the business, which was already the largest model retailer in the UK, to fatten it up for sale by growing the store portfolio at a time when online competition was eroding their advantage of having a wholesale margin as well. The business lost £750,000 in 2012, as a result. It will deal a major blow to model maker Hornby, in particular.
The administrators, Deloitte kept the business trading whilst looking for buyers, but announced on Friday that they had failed and that all 47 stores would close immediately.
Richard Hawes, joint administrator at Deloitte, said: “Despite our continued efforts, we have been unable to identify a buyer for the retail business.”
Deloitte confirmed it continued to hold talks with potential buyers for wholesaling arm, Amerang.