Wed, 10 Jun 2020 | ADMINISTRATION
Glasgow-based fashion retailer Quiz will put its subsidiary Kast Retail into administration, before buying its stock and assets back for £1.3 million and renegotiating its leases across the UK. Announcing a wide restructuring, the company said that the “economics of operating stores on traditional leases” was “becoming increasingly difficult”.
Quiz is reportedly seeking to appoint Blair Nimmo and Alistair McAlinden of KPMG as administrators for Kast Retail, which operates as its wholly owned subsidiary, with 82 standalone stores in the UK and Republic of Ireland. If the proposed reacquisition of Kast from administrators goes through, its other wholly owned subsidiary Zandra Retail Limited will take on the business assets of Kast.
822 of Kast’s 915 employees will transfer to Zandra, with job losses expected at the company’s Glasgow head office and Bellshill distribution centre. The company will also seek new lease agreements, which Quiz says would enable it to run an “economically viable store portfolio alongside its online, UK concession and international channels”.
The company said that the closure of its stores due to COVID-19 had caused the administration. Chief executive Tarak Ramzan said that: “Physical retail in the UK was facing a major structural challenge prior to the outbreak of COVID-19”.
Ramzan added: “Whilst we have taken pro-active actions over the past 18 months to drive footfall to our stores and renegotiate leases to improve performance, the significant economic uncertainty we now face as consumers and businesses emerge from the COVID-19 pandemic has meant that, in order to ensure a sustainable future for the group, we have taken this decision to place the subsidiary which operates our stores into administration.”
Quiz says that it has cash of £5.93 million along with additional banking facilities of £1.75 million and that it is in discussions over securing a longer-term line of credit.
In its most recent accounts, for the year ending March 31 2019, Kast Retail recorded turnover of £84.6 million, up from around £77.5 million in 2018, with gross profit of £32.5 million. At the time, the company’s total assets less current liabilities were valued at around £12.8 million.
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