LK Bennett: Another one bites the dust
March 18, 2019
2 min read
What's going on here?
After failing to find new financial backers, upmarket fashion chain LK Bennett (frequented by the likes of Kate Middleton and Theresa May) has collapsed into administration. The administrator is now tasked with gathering together the assets of the company to sell, and redistributing the proceeds among the company’s creditors (lenders).
What does this mean?
In the simplest of terms, the niche market fashion chain is in trouble as it prepares to usher in the administrators. The process will be overseen by accountancy firm EY, the same firm that oversaw the closure of 31 (of a total of 58) House of Fraser stores just last year. EY is being advised on the matter by DLA Piper’s corporate insolvency team. The reasons for the company’s demise are varied. For one, it failed to sufficiently differentiate its product line from cheaper, high street competitors. Blaming rising business rates and rents, the company has already had to close five outlets nationwide, resulting in 55 redundancies to date.
What's the big picture effect?
Founder Linda Bennett’s message to her staff says it all: “I fought as hard as I can … to turn the business into the success that I know it deserves to be. These are difficult and unstable times, and we are doing everything we can to identify the best way forward.” However, beyond what Bennett says, it seems as though the writing is on the wall.
LK Bennett’s current predicament speaks to a lack of consumer confidence stemming from the ever-present shadow of an as yet uncrystallised Brexit, and unspoken uncertainties as to what shape the economy will ultimately take.
The Labour Party (in the form of shadow business secretary Rebecca Long Bailey’s statement) sought to politicise the company’s failure, suggesting that it might be resolved by measures such as introducing free wi-fi in town centres, banning ATM charges and providing free bus travel for the under-25s. However, with these comments, Bailey has demonstrated her underestimation of the underlying causes.
The bottom line is that Brexit has placed the UK’s political, and constitutional system under great strain, and there has never been a better barometer than the high street.
Report written by Mark P
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