Administrators working on behalf of Clinton Cards have announced a further 17 commercial property store closures by today. This will bring the total number of commercial properties lost by the chain to 229, with hundreds of redundancies a further casualty of the chain’s collapse earlier this year.
Peter Saville, Simon Freakley and Anne O’Keefe, of Corporate Advisory and Restructuring specialists Zolfo Cooper, were appointed joint administrators of Clinton Cards and its assets, including Birthdays Retail Limited, in May of this year. Since then, they have negotiated the sale of the brands and assets, including 397 commercial property stores across the UK, to Lakeshore Lending Limited. Lakeshore is a subsidiary of American Greetings Corporation, previously the largest supplier to Clinton Cards’ UK commercial properties.
The confirmation of the sale was announced on June 7th, with American Greetings thought to have saved up to 4,500 high street commercial property jobs. However, the American chain is thought not to have paid a penny for the 397 commercial property stores and rights to the brand names, as it already purchased the £35 million bank debts which sparked the initial administration anyway.
American Greetings boss Zev Weiss believes that the chain can be restored to the high streets as the strong competitor it once was following some restructuring and sales initiatives.
He says; “We are pleased to welcome these stores, the Clinton Cards brand and approximately 4,500 employees as members of the American Greetings family.
“We believe that, properly managed, Clinton Cards can be both an important and profitable retailer in the speciality channel of distribution.”
Clinton Cards suffered severe losses during the double-dip recession, with many consumers put off by high prices in the company’s many UK stores. However strong competition from other retailers branching into the greetings cards industry, such as supermarket commercial properties, added to the woes of the Clinton’s board of directors, as many people now choose to pick up birthday and occasions cards with their weekly shop rather than visiting a high street speciality store.
Additionally, the struggles of employees of the Clinton Cards brand are far from over – although Lakeshore will now be in control of 397 stores, it has not yet been decided which of Clinton Cards’ 767 commercial properties will be included in the sale. This means that 330 stores remained under the control of the administrators from Zolfo Cooper after the terms of sale had been negotiated.
The Joint Administrators made the decision, on the 8th June, to close 43 unprofitable commercial properties in a bid to prevent further financial losses for the brand. However, this was followed by a spate of redundancies in quick succession for commercial property employees, with 122 stores closing on the 21st of June and a further 47 ceasing trading on the 30th June, just over a week later.
Earlier this week, Zolfo Cooper announced that an additional 17 stores would be closed until administrators could find a buyer for the unprofitable commercial properties. It was rumoured that both WH Smith and Card Factory had registered interest in a number of the commercial properties – however, administrators rejected both offers as the maximum either chain was willing to offer was £20 million.
With further redundancies and commercial property store closures looming, it appears that the troubles are not yet over for the struggling British brand, nor its anxious employees.
Do you think American Greetings’ subsidiary Lakeshore will be able to turn the fortunes of Clinton Cards around? Or do you believe that competition from commercial property supermarkets will prove too great for small specialist stores to fight back?
