East Lifestyle Limited, the high street bohemian fashion retailer known as East has entered administration for the second time in three years, putting hundreds of jobs at risk.
The womenswear retailer was founded by former Monsoon staff and opened its doors on Fulham Road, London, in 1994, which is close to Company Debt’s Central London office. Since this time, East had built up a national network of 34 shops and 15 concessions. However, like many other high profile fashion retailers, it has been battling against a tough trading environment, with falling consumer spending, increased payroll costs and online competition all ratcheting up the pressure. The boho chic retailer also failed to secure the investment needed to bring its expansion plans to fruition.
Restructuring Specialists in London
FRP Advisory, the restructuring specialists that are also the professional advisers overseeing the collapse of BHS, was called in on 29 January and have said the business will trade as normal while it works on options to sell all, or parts of the business.
In a statement, the administrators said: “Unfortunately, East is the latest high-street casualty, following a tough trading period at the end of last year.
“The retailer was making progress to expand its footprint, particularly looking at international opportunities, however, it has been unable to secure the necessary funding to realise those plans,” he added.
This is the second time the retailer has gone into administration. In 2015, parts of the old company were brought back by new company East Lifestyle Limited through a pre-pack deal worth £3.4m, rescuing 550 jobs across 82 stores. The pre-pack deal offloaded 16 loss-making stores and 5 concessions, with a loss of 156 jobs, according to trade publication Drapers, a move that was necessary to secure the retailer’s future.
At this time and since 2012, East Lifestyle’s sole shareholder was Fabindia, an Indian retail group, which promotes and sells India’s vast array of craft traditions and was founded in 1960. However, Fabindia sold an 80% share in East to New York-based investor Rahul Kakar from Crore Capital in 2016.
London Retail Sector
Accountancy firm Moore Stephens has warned that 19% of UK clothing retailers are showing early warning signs of insolvency. Their research indicates that out of 35,078 UK fashion retailers that were analysed, 6,580 are showing early signs of financial distress, such as a large drop in revenue and/or poor payment history.
Jeremy Willmont, Head of Restructuring and Insolvency at Moore Stephens, commented: “Clothing retailers have faced some of the most difficult trading conditions since the recession in the past year. Fashion retailers have been hit by the perfect storm of rising costs, falling consumer spending and increased competition. All three have heaped pressure on revenue and made profit margins difficult to maintain.
“The increasing popularity of online-only retailers, who have more manageable bills for business rates and lower payroll, means that many fashion retailers will need to improve their ‘bricks and clicks’ offering if they are to thrive.”