Baird Group, the UK licensee for Ben Sherman and Jeff Banks, has confirmed it is acting to safeguard its long-term future by launching a Company Voluntary Arrangement (CVA) proposal through KPMG’s Restructuring practice.
The news comes in light of the dramatic impact on trade caused by the COVID-19 lockdown, the administration of Debenhams and the ongoing challenges in the retail markets.
Baird Group operates the tailoring concession at Debenhams stores and online, with brands including Ben Sherman, Jeff Banks, Racing Green, Hammond & Co, Occasions and The Collection.
The board of Baird Group have been working with KPMG’s Restructuring practice to review all options available to address the challenges presented by the pandemic. As a result, the board has formulated a recovery plan, contingent on the approval of the CVA, which provides Baird with a sustainable platform for its key business units.
A statement from Baird Group reads: “The CVA divides the company’s store portfolio into two groups. A total of 29 stores will see a reduction and phased rebuild of base rent, while a further 18 stores, one warehouse and one office will close immediately upon the CVA becoming effective.
“An unfortunate and unavoidable outcome of this process will be the loss of 264 members of staff who work in retail and distribution, mainly servicing the Debenhams business.”
Mark Cotter, CEO of Baird Group, commented: “The extraordinary circumstances that Baird has faced as a result of the global pandemic, coupled with the challenges presented to our business by the administration of Debenhams, prompted us to conduct a strategic review of options in order to safeguard the future of our business.
“As a result of this review, we have formulated a three-year plan to refocus on our core retail outlets – Suit Direct and Ben Sherman – the continued growth of our wholesale business, and further expansion of our online business.
“It is with deep regret that we will have to lose a number of our much-valued colleagues as we restructure our business. However, the board firmly believes that the CVA and the wider recovery plan will create a solid platform for a successful and sustainable business for many years to come for all our employees and stakeholders.”
Commenting on CVA proposal announced by Baird Group, Howard Smith, associate partner at KPMG, joint nominee and proposed joint supervisor of the CVA said:
“Baird Group has a proud heritage in the menswear market, with a number of popular high street brands including Ben Sherman and Suit Direct.
“However, the business has been impacted significantly by the strong headwinds facing the retail sector, including the performance of its concession partners, a sub-sector of retail which has seen a high level of insolvencies in recent years. These challenges were then further exacerbated by the impact of the COVID-19 pandemic.
“The CVA therefore forms a key plank of a wider turnaround programme, which seeks to move the business away from a reliance on concessions, high street channels and workwear categories, instead focussing investment on attractive outlet centres and online sales.”
Baird Group needs to secure at least 75% creditor approval by value for the CVA for it to proceed. Detailed proposal documents are available to creditors via a dedicated website.
The creditors will vote on the CVA on 10 August, 2020. Consultations have already taken place with key creditors and KPMG will spend the coming weeks in further talks with key creditors to ensure they understand the full detail of the proposal.
Talbot Logan, senior vice president of brand management for Marquee Brands, the US-based global parent company for Ben Sherman, said: “The focus of what Baird has decided to do is really to use the CVA to clear up some problematic contracts and leases, and it’s an opportunity to renegotiate on rents to bring them more in line with how the market is actually performing.
“Baird does not own the Ben Sherman brand, Marquee Brands does, though they are a key partner to the brand and our largest UK licensee on apparel, namely tailoring and sportswear. They also run all the stores in the UK and manage the concessions with Debenhams.
“We have an ongoing relationship with Baird which, so long as it continues to be successful, which it has been, it is our intention to continue growing with them. They have done an amazing job investing the right time and energy into the brand and we’ve done a lot of work together to focus the line in the last two years.
“They have also been a key component as we’ve been reaching out to other territories. They helped us get our business up in Italy and Spain this year. They supplied the product, though we own those licences directly. They remain a key component to that growth strategy.”
While e-commerce will now have an increased focus for the Ben Sherman brand globally, Baird Group currently operates 15 Ben Sherman standalone stores in the UK, and Logan adds: “They plan to invest in the Ben Sherman brand and the plan is to grow not shrink the Ben Sherman retail proposition as part of the CVA.
“There are now some fantastic opportunities to expand our retail footprint with so many other retailers struggling. There are landlords that are eager to have Ben Sherman come in to those vacant spaces, and we’ve already been approached with opportunities both in the UK and in Germany. We won’t be scaling back our retail, we will be growing it.”
Baird Group also owns and operates one of the best known and trusted special hire services in the UK, Young’s Hire, which is operated on behalf of Debenhams plc by BMB Clothing Ltd., a member of the Baird Group of companies.
Operating from Debenhams concessions and its Suit Direct stores, Young’s Hire provides quality suits at competitive hire prices for any occasion, though occasion wear has taken a huge hit with the pandemic and lockdown. It’s as yet unclear as to what will happen to that side of Baird’s business, but all will become clearer when the full details of the CVA are revealed.
Meanwhile, Debenhams is reportedly looking to go ahead with a plan that could see it change hands, after the department store retailer fell in to administration for the second time within a year during the lockdown.