Beales, one of the UK’s oldest department store chains, has entered administration, with 1,300 jobs on the line, after no buyer was found.
Established as a family-run business in 1881, the Beales chain spread across the UK over the following 139 years, boasting that it was the first department store in the world to feature a live Father Christmas, as long ago as 1885.
Despite expanding for several decades, as well as being floated on the London Stock Exchange in 1995, the chain showed signs of financial stress in more recent times, having posted losses of £3.1 million in the year to March 2019. This was a marked deterioration for the chain, after having recorded a loss of £1.3 million in 2017-18.
Bye-bye to Beales
Earlier in January, Beales attempted to find a buyer to acquire it and avoid having to call in the administrators, but unfortunately for the chain, its calls fell on deaf ears. Having found no willing buyers, Beales called in KPMG as administrators.
As many as 23 stores are now at risk, employing a total of 1,300 people at present. If you’re interested in acquiring a business bought from administration, but curious to know what this means about the employees who will be working for you, read our guide about employees’ rights in businesses bought from administration.
The chain’s customer-facing website went offline shortly after it went into administration. Despite this, no store closures are expected immediately, and the chain will continue to operate, at least in the short term.
Beales’ decline is part of the ongoing retail crisis that has affected many high streets across the UK.
The British Retail Consortium (BRC) reported that 2019 was the worst year for retail on record, having monitored retail activity since 1995. In their latest findings, the BRC estimated that total sales dropping 0.1 per cent during the year, having grown 1.2 per cent in 2018.
Part of a growing trend
As recently as 2018, Beales was buying up smaller chains including Palmers, having acquired stores from Bentalls and Westgate in recent years. However, as it expanded, Beales started to experience growing losses.
The story of Beales entering administration is just one in a long line of other major chains experiencing difficulties. Rising business rates, coupled with weaker retail sales, have been cited as likely reasons for chains such as Beales having no option but to close.
Mothercare, a firm favourite of new and expectant mothers, entered into administration back in November, while Mamas and Papas was sold into a pre-pack administration deal, indicating that a number of chains have been struggling in recent years.
The trend in the retail sector is important to bear in mind, especially if you’re considering buying a distressed business out of administration.
Wondering what you’ll need to know, if you find yourself eyeing up a potential acquisition in this situation? Check out our guide to help you stand out from the crowd, when seeking to buy a business out of administration today.
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