Coronavirus: Cath Kidston races to find buyer as COVID-19 haunts retailers

Cath Kidston, the British modern vintage retailer known for its floral and polka dot designs, is this weekend racing to find a buyer as it tries to avoid becoming the latest high street casualty of the coronavirus pandemic.

Sky News has learnt that Cath Kidston, which was set up by its eponymous former boss in 1993, has drafted in advisers to undertake an urgent review of its strategic options.

Insiders said on Saturday that Alvarez & Marsal (A&M) had notified prospective bidders this week that offers were required imminently for the business.

Cath Kidston employs about 800 people, and trades from 60 stores in the UK – including a flagship outlet on London’s Piccadilly that opened in 2016.

The brand has become one of the most popular modern vintage designers, growing from a single shop in West London selling car boot finds and vintage fabric into a globally recognised brand offering fashion, homewares and accessories.

It made a fortune for its founder when she sold a stake to private equity firm TA Associates exactly 10 years ago in a deal reportedly worth £100m.

In 2014, Baring Private Equity Asia became a substantial shareholder in the company, before taking full control two years later.

Baring hoped to capitalise on Cath Kidston’s popularity in the Far East, with its 100th overseas store opening in Seoul, South Korea, in 2014.

However, it has lost more than £27m in the last two financial years, and made a further £11m loss before interest, tax, depreciation and amortisation in the nine months to December, according to information sent to potential bidders.

The COVID-19 crisis has exacerbated Cath Kidston’s problems, meaning insolvency is one possible outcome for the company if a buyer cannot be found.

Globally, it trades from more than 200 shops, and boasts brand awareness of 70% in the UK.

“Cath Kidston has been actively implementing a new business strategy to support the growth of the brand while managing the many pressures in the retail sector,” a spokesman said.

“This includes dealing with the outbreak of COVID-19, which has been impacting the business globally since the beginning of the year.

“We have therefore initiated a process to explore options for the business, to enable the management team to continue implementing their strategy to deliver growth.”

The company said the process was in its early stages, although A&M is said to be seeking to complete a sale “within a short time-frame”.

It was unclear this weekend whether a pre-pack administration was among the options being explored, or who the interested parties were.

Sources said that a challenging trading environment had worsened significantly since the coronavirus outbreak in China spread around the world.

Almost 40% of Cath Kidston’s revenue is generated from tourists and international business, particularly from Asia.

The sources added, however, that a turnaround strategy drawn up by Melinda Paraie, who joined as chief executive from luxury goods brand Coach in 2018, had begun to bear fruit prior to the coronavirus pandemic.

Under Ms Paraie, Cath Kidston has slashed operating costs by axing 40% of head office staff and closing a number of shops.

It has also sought to boost digital sales through a new online platform.

Source: Read Full Article