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Fears for hundreds of jobs as Sports Direct buys up Evans Cycles Fears for hundreds of jobs as Sports Direct buys up Evans Cycles
(about 1 hour later)
Mike Ashley’s Sports Direct has bought Evans Cycles out of administration but has warned it may have to close half the specialist retailer’s 62 stores putting hundreds of jobs at risk. Mike Ashley’s Sports Direct has bought Evans Cycles out of administration but has warned that it may have to close half the specialist retailer’s 62 stores, putting about 440 jobs at risk.
Evans, which traces its roots back nearly 100 years, had been seeking a buyer after its management team said they needed £20m for a turnaround plan that its former private equity owners were unwilling to fund.Evans, which traces its roots back nearly 100 years, had been seeking a buyer after its management team said they needed £20m for a turnaround plan that its former private equity owners were unwilling to fund.
Sports Direct bought House of Fraser in a similar pre-pack deal in August and is also thought to be interested in buying Debenhams, the department store group in which it owns a large stake. Sports Direct bought House of Fraser in a similar prepack deal in August and is also thought to be interested in buying Debenhams, the department store group in which it owns a large stake.
Ashley, the chief executive of Sports Direct, said: “We are pleased to have rescued the Evans Cycles brand. However, in order to save the business we only believe we will be able to keep 50% of stores open in the future. Unfortunately some stores will have to close.” Ashley, chief executive of Sports Direct, said: “We are pleased to have rescued the Evans Cycles brand. However, in order to save the business, we only believe we will be able to keep 50% of stores open in the future. Unfortunately, some stores will have to close.”
Evans had been struggling to survive amid tough high street conditions that have already seen Toys R Us, Maplin and House of Fraser collapse into administration and a string of other well-known names close stores. Evans, which employs 1,300 people in total, of whom about 880 work in store, had been struggling to survive amid tough high street conditions that have already seen Toys R Us, Maplin and House of Fraser collapse into administration, and a string of other well-known names close their stores.
Toys R Us: 180 stores employing 3,000 staff, collapsed 28 February. Owes £15m in VAT, due by 1 March. Gourmet Burger Kitchen: The up-market burger chain wants to close 17 of its 85 restaurants via an insolvency process known as a company voluntary arrangement (CVA)
Maplin: 200 electronics and gadget stores, founded 1972, also failed on 28 February. House of Fraser: The department store chain is expected to close about 12 stores after being bought out of administration by Mike Ashley. It had agreed a CVA under which 31 stores were to close, but this lapsed on administration.
Warren Evans: bedmaker went into administration earlier in February. Homebase: The DIY chain is closing at least 42 stores after completing a CVA organised by new owner Hilco.  The restructuring expert bought the DIY chain for £1 from Australia's Wesfarmers who botched an attempt to bring its Bunnings chain to the UK.
East: fashion brand with nearly 50 outlets folded in January. Poundworld: The discount retailer has closed all its 355 stores, with the loss of 5,100 jobs after falling into administration in June.
Juice Corp: business behind brands including Elizabeth Emanuel and Joe Bloggs went under in January. Cau: The owner of the Gaucho and Cau steakhouses fell into administration in July leading to the closure of all 22 Cau restaurants, with loss of 750 jobs. The groups lenders have since bought the 16 Gaucho outlets.
Multiyork: furniture chain with 50 stores went into administration in November. Mothercare: The chain is closing 60 of its 137 outlets after agreeing a CVA in May. Additional closures in July mean 900 jobs will be lost.
Feather & Black: bedroom furniture and bedding specialist with 25 outlets fell into administration in November. Carluccio's: The Italian chain secured a CVA to close 30 of its 99 restaurants in late May.
New Look has debts of more than £1bn and has lost some of its credit insurance cover, which protects suppliers if a retailer goes bust. In the 10 months to Christmas, sales fell 11% and losses hit £123m. The company intends to close 60 stores and change its fashion ranges, but faces a struggle to win back young shoppers. New Look: The fashion chain obtained a CVA in March to cut rents and close 60 stores, with the loss of nearly 1,000 jobs. The rent cuts – on 363 stores – were between 15% and 55%.
House of Fraser's Chinese owner, Sanpower, had to stump up £25m to see the store through Christmas and its debt is rated as junk. The retailer is attempting to reduce the size of its stores by 30% and has asked landlords to cut rents. Carpetright: The retailer obtained a CVA in April to close 92 of its 409 UK stores in September with the loss of about 300 jobs.
Debenhams, a 178-store chain that is more than 200 years old, is axing one in four of its managers and considering closures to cut costs. It has warned that profits have been hit by lower than expected sales, with profit margins also down as a result of having to cut prices to match rivals. Prezzo: In March the Italian-themed restaurant group secured a CVA to close 94 of its 300 restaurants, with the loss of 500 jobs. Rent cuts were agreed on a further 57 locations.
The cycle retailer also faced fierce price competition, particularly from fast-growing online rival Wiggle. Jamie’s Italian: The chain closed six locations in 2017 and this year agreed a CVA to close about a third of its 35 loss-making outlets.
The retailer slumped nearly £6m into the red in 2016 and has since faced rising business rates, an increase in the minimum wage and a fall in the pound’s value, which has made imported goods more expensive. Byron: The upmarket burger chain is closing up to 20 of its 67 restaurants after a CVA agreed in January.
In the year to October 2017, sales rose nearly 2% to £138m, but the company recorded another loss, of £2.5m. Debenhams: The under-pressure department store chain has said it could close up to 50 of its 165 stores stores and wants to get rid of space at 30 more by bringing in gyms and other services.
Given the difficulties across the retail sector, private equity firm ECI Partners, which bought Evans three years ago, and the retailers’ lenders AIB and HSBC decided not to put any more money into the business. M&S: The high street stalwart wants to close 100 outlets – a third of its main stores by 2022 as part of a 'radical transformation' plan.
James Keany, at advisory firm CBRE which is retained to manage property for Sports Direct, said: “We are looking forward to working with landlords in order to help create a sustainable business. We will make contact with landlords over the next few days and discuss the future of individual stores.” The cycle retailer also faced fierce price competition, particularly from the fast-growing online sports retailer rival Wiggle.
Sports Direct’s warning that it was likely to close half of Evans’ stores appears to have come as a surprise to PricewaterhouseCoopers (PwC), the advisory firm which sealed the sale of Evans and put it into administration immediately ahead of the sale on Tuesday. Evans found itself nearly £6m into the red in 2016 and has since faced rising business rates, an increase in the minimum wage and a fall in the pound’s value, which has made imported goods more expensive. In the year to October 2017, its sales rose nearly 2% to £138m, but the company recorded another loss, of £2.5m.
Matt Callaghan, joint administrator and PwC partner said: “Evans is a long-standing, well known and trusted brand with nearly 100 years of heritage in the cycling market. To have managed to preserve the business and transfer all staff to the purchaser is particularly pleasing. Amid the difficulties across the retail sector, the private equity firm ECI Partners, which bought Evans three years ago, and the retailers’ lenders, AIB and HSBC, were unable to agree on a deal to fund management’s rescue plan.
“2018 has been a very difficult trading year for the business, in part due to the impact of the extended winter weather in the early part of the year and a lack of cash to invest in stores and develop the online platform. A combination of losses, the capital expenditure requirements and tightening credit has led to a liquidity crunch. “ James Keany, at the advisory firm CBRE, which is retained to manage property for Sports Direct, said: “We are looking forward to working with landlords in order to help create a sustainable business. We will make contact with landlords over the next few days and discuss the future of individual stores.”
Sports Direct’s warning that it was likely to close half of Evans’ stores appears to have come as a surprise to PricewaterhouseCoopers (PwC), the advisory firm that sealed the sale of Evans and put it into administration immediately ahead of the sale on Tuesday.
Matt Callaghan, joint administrator and PwC partner, said: “Evans is a longstanding, well known and trusted brand with nearly 100 years of heritage in the cycling market. To have managed to preserve the business and transfer all staff to the purchaser is particularly pleasing; 2018 has been a very difficult trading year for the business, in part due to the impact of the extended winter weather in the early part of the year and a lack of cash to invest in stores and develop the online platform. A combination of losses, the capital expenditure requirements and tightening credit has led to a liquidity crunch.”
Sports Direct InternationalSports Direct International
Retail industry
Mergers and acquisitions
CyclingCycling
Mike Ashley
Retail industry
Job lossesJob losses
PricewaterhouseCoopers Mergers and acquisitions
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