Peacocks clothing chain: £240m debt talks continue

Reports suggest that going in to administration is a real possibility

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Talks are continuing between clothing retailer Peacocks and its lenders about restructuring the company's debts of around £240m.

A report in the Telegraph suggested that those negotiations had so far failed, and administration was a possibility.

The Cardiff-based company, which employs more than 400 at its HQ, has said talks are continuing.

Cardiff West MP Kevin Brennan has urged the UK government to intervene.

If Peacocks was to go into administration it would be one of the largest firms of any description to have done so in Wales in many years.

The company, which employs thousands across the UK and beyond, has experienced spectacular growth over the past 15 years.

The chief executive, and 30% shareholder, Richard Kirk has led the transformation since buying out the Peacock family in the mid 90s.

Profits grew tenfold in a decade as the business changed from a traditional women's clothing retailer to a fast-moving high street fashion name, competing with the likes of Primark and Top Shop.

Operating profits

It now has more than 600 stores and concessions in the UK, and 117 stores around the world. The expansion into Russia and Eastern Europe has been particularly successful.

It also bought the Yorkshire-based retailer Bon Marche 10 years ago.

Start Quote

This is potentially a big blow to the people of Cardiff and south Wales as a whole and it would be highly damaging to the Welsh economy”

End Quote Kevin Brennan

During the fast expansion, the company floated on the stock market but Richard Kirk was unhappy with the share-price the company was getting and led a management buy out, with the backing of two US financial operations and the investment bank Goldman Sachs.

However that deal saddled the company with the debts that are at the centre of the current negotiations.

So how is Peacocks faring? The latest official results posted by the company cover the year to April 2010 and they show the group's stores made operating profits of £27m, however that was reduced to a pre-tax loss of £56m as a result of £77m in bank loans and overdrafts.

It is unclear how the stores have done since then.

A spokesperson for one of its lenders, the Royal Bank of Scotland (RBS) told BBC Wales on Sunday night that each company restructuring was judged on its own merits but the difficult conditions retailers faced was an important factor.

"We have been and continue to be supportive of the company," said the spokesperson.

"New investors willing to inject sufficient capital could not be found.

'Highly damaging'

"If further funds are required then this is an issue for shareholders and for approval by a majority of the company's lenders."

Mr Brennan said Peacocks had been a major employer in Cardiff for a number of years and that everything needed to be done to try and save the business and jobs.

"This is potentially a big blow to the people of Cardiff and south Wales as a whole and it would be highly damaging to the Welsh economy," said the Labour MP.

"I call upon the UK government to do all they can to not only encourage further talks between the retailer and its banks and lenders but also to assist Peacocks in safeguarding jobs.

"The sooner all interested parties get round the negotiating table and come up with an agreeable solution the better."

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