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Republic chain enters administration Republic chain enters administration
(35 minutes later)
Clothing chain Republic has confirmed widespread fears, announcing that it has called in the administrators.Clothing chain Republic has confirmed widespread fears, announcing that it has called in the administrators.
The Leeds-based retailer, which has 121 stores and about 2,500 staff, said it had appointed accountants from Ernst & Young to take over running of the firm.The Leeds-based retailer, which has 121 stores and about 2,500 staff, said it had appointed accountants from Ernst & Young to take over running of the firm.
The administrators said they had already made 150 staff at the firm's head office in Leeds redundant.The administrators said they had already made 150 staff at the firm's head office in Leeds redundant.
Republic will continue to be open for business, with administrators hoping to sell it as a going concern.Republic will continue to be open for business, with administrators hoping to sell it as a going concern.
"The brand Republic is well recognised, particularly in the North," said Hunter Kelly, one of the newly-appointed administrators."The brand Republic is well recognised, particularly in the North," said Hunter Kelly, one of the newly-appointed administrators.
"It has a powerful website offering, owns well-known brand names, and has some very attractive and profitable stores.""It has a powerful website offering, owns well-known brand names, and has some very attractive and profitable stores."
Hard hit demographicHard hit demographic
Republic is owned by private equity firm TPG, which bought the company in 2010 in a deal thought to be worth about £300m, and now stands to lose much, if not all, of its investment.
Some private equity firms have been accused in the past of taking a gamble with the companies they buy up, by loading them up with debt - something that allows them to reduce the amount of cash they need to invest themselves, and which allows them to deduct the interest payments from their tax bill.
But, according to retail analyst Nick Bubb, this did not appear to be the case with TPG's purchase of Republic - indeed at one point the investment firm sank even more of its own money into the business in a failed attempt to turn it around.
"I just think TPG made a mistake," said Mr Bubb. "Three years ago, TPG thought they were buying a highly profitable and dynamic young fashion brand with lots of expansion potential, but they simply bought the wrong brand at the wrong time for the wrong price."
Founded in 1986, as men's denim retailer in Leeds under the name Best Jeans, Republic underwent a rapid expansion 10 years ago, but has since seen sales slacken off.Founded in 1986, as men's denim retailer in Leeds under the name Best Jeans, Republic underwent a rapid expansion 10 years ago, but has since seen sales slacken off.
"Republic suffered poor trading results in the autumn, and whilst sales picked up in December there has been a sudden and rapid decline in sales in late January," said Mr Kelly. "Republic suffered poor trading results in the autumn, and whilst sales picked up in December there has been a sudden and rapid decline in sales in late January," said Mr Kelly of Ernst & Young.
That slump in sales caused a drain in cash that meant the retailer could no longer pay its bills on time.That slump in sales caused a drain in cash that meant the retailer could no longer pay its bills on time.
The company focuses on the youth fashion market, which is fiercely competitive and under pressure, offering brands such as Jack & Jones and SoulCal.The company focuses on the youth fashion market, which is fiercely competitive and under pressure, offering brands such as Jack & Jones and SoulCal.
"Operating towards the value end of the market should have placed the retailer in a strong position to take advantage of the consumer trend towards low-cost fashion," said Anusha Couttigane, from retail consultancy Conlumino.
"However, its target youth market has been the hardest hit demographic of the recession and it has struggled to appeal to them as effectively as rivals such as Primark, Asos or H&M.
"Fashion is a fast-moving industry where brand loyalty is fickle and Republic has failed to keep up with some pretty fierce competitors," she said.
'Worst' post-Christmas period'Worst' post-Christmas period
Republic is following in the footsteps of a list of High Street stalwarts.Republic is following in the footsteps of a list of High Street stalwarts.
These include the music retailer HMV, the camera group Jessops, and the DVD and games rental company Blockbuster.These include the music retailer HMV, the camera group Jessops, and the DVD and games rental company Blockbuster.
Administrators at Blockbuster announced on Wednesday that they would shut a further 164 stores at the DVD rental chain, adding to the 160 closures already announced, and leaving only 204 still open.Administrators at Blockbuster announced on Wednesday that they would shut a further 164 stores at the DVD rental chain, adding to the 160 closures already announced, and leaving only 204 still open.
"It's the worst post-Christmas period we've seen in a long time," said Matthew Hopkinson from the Local Data Company."It's the worst post-Christmas period we've seen in a long time," said Matthew Hopkinson from the Local Data Company.
Republic is owned by private equity firm TPG, which bought the company in 2010 in a deal thought to be worth about £300m. He added that while some stores may be snapped up, the vast majority of them are in shopping centres, which would be difficult to fill.
According to Anusha Couttigane, TPG had been trying to sell off some stores and persuade landlords to agree to lower rents.
"News of its administration suggests that attempts to renegotiate monthly payments have failed, bringing the business to a complete standstill and landlords facing the prospect of more vacant units on the High Street," she said.
Matthew Hopkinson said that while some stores may be snapped up, the vast majority of them are in shopping centres, which would be difficult to fill.
"HMV and others have also been sitting in shopping centres and therefore I think the number of units which have gone in the last few months in shopping centres will make it far harder than 12 months to refill them," he said."HMV and others have also been sitting in shopping centres and therefore I think the number of units which have gone in the last few months in shopping centres will make it far harder than 12 months to refill them," he said.
Its chairman, Andy Bond, who was a former boss of Asda, is said to have left the company last week after two years.Its chairman, Andy Bond, who was a former boss of Asda, is said to have left the company last week after two years.
Its current chief executive is the former boss of TK Maxx, Paul Sweetenham.Its current chief executive is the former boss of TK Maxx, Paul Sweetenham.