Since the end of the recession, the number of high street retail administrations has reduced markedly, leading many analysts to hope that recovery is in full swing within the retail sector. Unfortunately the latest news from La Senza indicates that there is still some way to go before retailers can feel secure about their financial status, as the lingerie brand has entered administration for the second time in two years.
The retailer first entered administration in January 2012 after consumer spending habits were heavily affected by the financial crisis, closing upwards of 80 stores nationwide and laying off a large percentage of its workforce. This time around, however, administrators from PwC have claimed there are “no immediate plans to close any stores”, indicating that the 55 remaining franchised stores and 752 employees may have a little more job security than in the previous situation.
Joint administrator Robert Moran, of PwC, believes that the continued impact of the financial crisis on consumer spending habits lies at the root of La Senza’s difficulties.
He says; “The challenging conditions in the UK high street are well documented.
“Like many other retailers, La Senza has been hit hard by the difficult economic environment and a slowdown in consumer spending.
“The administrators are continuing to trade the businesses as normal for the time being whilst discussions take place with interested parties in respect of a sale – we welcome any approaches to purchase all or part of the store portfolio.”
La Senza first shot to fame after being acquired by Dragon’s Den star and entrepreneur Theo Paphitis in 1998, who remained at the helm for eight years before selling the majority share in the business to private equity group Lion Capital in 2006. However, shortly after the brand encountered difficulties as a result of the recession, posting numerous profit warnings before eventually being acquired by current owner Alshaya through a pre-pack administration deal in 2012.
Administrators are currently dealing with Alshaya’s UK business, known as Marnixheath Limited, which holds not only all La Senza assets but also three Pinkberry outlets in London and the South East. While the future of this frozen yoghurt business is uncertain, Alshaya has confirmed that the latest administration will not affect La Senza outlets in the United States or Canada.
Upon confirming the appointment of administrators from PwC, Alshaya representatives said; “Every effort has been made for two and a half years to transform and revitalise the La Senza UK business, but it has continued to experience difficult trading conditions against the backdrop of a challenging economy and the changing dynamics of the UK retail market.
“We have, therefore, decided with regret that there is no alternative to administration.
“We will work closely with the administrators as they explore their options for the business and if they choose to close all or part of the business, every effort will be made to support staff in finding alternative opportunities for employment.”
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