Britain, January 13, 2020 — cyberinktimes.com — Beales’ 22 shops span the length of Britain — from Perth to Worthing. If the chain collapses, those town centres lose a pillar. Some of those buildings are historic, on prime high-street land.
That real estate is expensive to maintain. Above-market rents helped sink the company.
A buyer would almost certainly demand cuts. Landlords face a choice: take less or watch the stores go dark. Christmas trading tipped the balance.
November and December sales fell below already-cautious forecasts. Like-for-like revenue dropped by low-single-digit percentages.
That squeezed working capital just as quarterly rent came due. The company had no cushion. A £3.1 million pre-tax loss for the year to March 2019 had drained reserves.
Auditors warned last autumn that Beales might not survive unless trade improved. It did not. Chief executive Tony Brown led a management buy-out backed by specialist lender Hilco in 2018.
That deal loaded the chain with debt. Now Brown is racing the clock.
He told staff in a memo that “every possible avenue” was being pursued. “We need to secure new ownership or revised terms with landlords within days, not weeks,” he wrote. Days.
Not weeks. Two prospective buyers are in talks.
One is a rival high-street retailer. The other is a turnaround investor. Indicative bids came in before the weekend.
Binding offers are expected by Wednesday. Accountancy firm KPMG is advising the board. It has drawn up contingency plans for an administration filing if negotiations stall.
That is the backup plan: court-appointed administrators take over, stores close, staff lose jobs. Roughly 1,000 people work at Beales.
They depend on those paychecks. The company warned on 13 January that its shops could close within days unless a buyer is found. That deadline is tight.
Any deal would almost certainly involve store closures and rent cuts. Some staff will be let go regardless.
Beales was founded in Bournemouth in 1881. It is 140 years old. Britain’s oldest department store chain now fights for survival in a week.
The high street has already lost House of Fraser, Debenhams, and others. Beales is smaller but still anchors shopping districts from Scotland to the south coast. Its collapse would leave gaps that are hard to fill.
The Christmas slump was the final blow. Trading over the crucial November-December period fell short of even low expectations.
That left no cash to pay quarterly rents. The company had already posted a £3.1 million pre-tax loss for the year to March 2019. Auditors flagged the going-concern risk last autumn.
The warning proved accurate. Tony Brown is in daily contact with the two bidders.
He wants a rescue deal. Landlords want to avoid empty buildings. Staff want to keep their jobs.
The clock runs out this week. KPMG has prepared the administration paperwork. If negotiations fail, the administrators walk in.
That is the end. Beales occupies sites that are often historic high-street buildings.
Those properties cost more to maintain than modern retail parks. Above-market rents were part of the problem. A buyer would demand cuts.
Landlords will have to decide: take less rent or lose the tenant entirely. Some may choose to let the stores close.
The company has 22 shops. That is a small chain but a wide geographic spread. Each store serves its local community.
Each employs local people. The fallout from a closure hits towns hard. Empty shops drag down foot traffic for nearby businesses.
The effects ripple out. Wednesday’s binding offers will decide the fate.
If a deal emerges, Beales survives in some form — likely smaller, with fewer stores. If no deal comes, administration follows. Staff get redundancy notices.
The oldest department store in Britain closes its doors. That is the choice now on the table.
