Menswear retail chain Ed Harry has been sold to a management buyout group led by the company’s chief executive and chief financial officer, just three months after the company fell into voluntary administration due to the precarious retail industry.
The new management team have said they will acquire 78 profitable stores out of a total of 130 locations – for an undisclosed price – and will focus on a new strategy for the entire business.
But one of the Ferrier Hodgson administrators who negotiated the deal says while there will be individual companies which can be restructured, there is still a lot of pain in the retail industry and there’s more to come.
“There’s still a lot of pain out there, there really is. We’re still getting inquiries from retailers which are struggling,” partner Martin Lewis says.
“You have the issue of the dollar, which is significantly impacting on businesses, and the amount of online purchasing that is happening right now is substantial. There are a lot of factors all coming together at once.”
Ferrier Hodgson is also handling the RedGroup Retail and Colorado accounts, which have both collapsed during the past few months.
But the Ed Harry deal represents a glimmer of hope – chief executive David Clark and chief financial officer John Read have lead a management buyout group, buying 78 profitable stores out of the existing 130 locations.
“The sale was proof that despite the widely publicised negative retail environment, there remains optimism in the sector and an appetite for good businesses,” Lewis says, adding there was a substantial number that were simply unprofitable.
“We were able to identify that it was quite clear there were a lot of stores that were simply unviable and in poor locations. So we closed a lot of them.”
Many companies have been forced to close some of their stores as a result of the harsh retail environment, including Krispy Kreme, Allied Brands and most recently, RedGroup Retail with the Borders and Angus & Robertson book chains.
“We couldn’t fund a long-term restructure, so the best idea is to just restabilise the business, continue to break even and then secure a sale. The new owners now will be allowed to take it where they want it.”
Both Clark and Read were contacted this morning, but were unavailable before publication. Clarke said in a statement they are planning to take the company in a new direction.
“A key change will be our increased focus on regular injections of trend men’s clothing and accessories in line with the modern customers’ demands,” Clark said in a statement.
“Our successful brands will continue to evolve quickly with exciting new labels. Complete coordination throughout our new brands and ranges is a high priority for our merchandise team, as is putting together an appropriate shopping environment for our new target customer.”
He also added the new buyout team had only bought profitable stores that sit in-line with the new strategy. New concept stores will soon be added in Richmond, Perth and Adelaide.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
