Bennetts Department Store – a Trading Administration Case Study
In February 2019 Louise Freestone and Paul Mallatratt of Bridgewood were appointed Joint Administrators of Bennetts (Irongate) Limited. Trading as Bennetts, the company's flagship store, reputedly the "oldest department store in the world", was based in Derby and it also had a smaller store in Ashbourne.
This has been a high profile insolvency case where, in spite of generally poor trading conditions on the high street, the Joint Administrators were able to successfully trade the business for a number of months, before completing a sale of the business' assets in Derby to new owners, thereby saving the major part of the business and protecting 28 jobs.
The Bennetts story has raised some interesting points about trading administrations, which are explored briefly in this article.
Harnessing the Power of the Media
Administrators generally try and avoid press attention, as it can be an unnecessary distraction. In this case we recognised that Bennetts was a much-loved local brand that would likely generate significant press attention. We therefore decided to conduct a proactive media campaign in order to raise awareness amongst the general public of the store's plight and our work to save it. Within a few days all of the major TV channels had filmed onsite and a Bridgewood spokesperson appeared regularly on local BBC radio shows. This helped to boost significantly the number of visitors to the store, resulting in retail sales much higher than anticipated. This strong trading performance allowed the Joint Administrators more time to find the right buyer for the business.
A number of interested parties, including the eventual buyers of the business, also became aware of Bennetts as a result of the media coverage.
Working Collaboratively with Stock Suppliers
A large number of stock suppliers were owed money by Bennetts when it went into administration, and most of these sought to exercise their Retention of Title (ROT) over the goods. ROT is a legal clause that allows a supplier to retain ownership over the goods supplied, subject to various key conditions being met (for example the supplier must demonstrate that the company was aware of, and accepted these terms before placing the order).
In order to successfully trade a large department store such as Bennetts, it was essential that the Joint Administrators were able to sell the stock held on site and to replenish stock where necessary. It was therefore decided to make proactive approaches to suppliers and work collaboratively with them to resolve any ROT issues as quickly as possible and ensure continuity of supplies.
Close working relationships were quickly established, enabling the Joint Administrators to replenish stock lines in a timely manner and the remaining stockholding was sold to the new owners at a premium.
Engaging with Staff to Improve the Trading Position
In the majority of trading administrations, the strategy is to simply keep the business “ticking over”, doing the bare minimum whilst a buyer is found. Whilst often the simplest and most practical route to take, it doesn't necessarily always deliver the best outcome. With Bennetts the Joint Administrators recognised the value that the staff, many of whom had long years of service and a wealth of retail experience, could add.
Regular engagement with staff was a key component of the trading administration and by tapping into the knowledge and expertise of all staff the Joint Administrators were able to introduce some new product lines and deliver a number of effective sales campaigns. The net result was an overall improvement in top line performance.
An additional benefit of this approach was that the staff felt more involved in the business and less unsettled by the administration process. This positive outlook in turn meant that customers continued to be looked after well, and general retail standards in the store were maintained. There was no absence from work and sickness levels were minimal. Many staff members even commented on how much they had enjoyed working with the Joint Administrators during what is usually a difficult period for employees.
Bennetts is an example of how good business acumen, operational management and people skills can be applied on top of the technical aspects of a trading administration, in order to deliver a better result for all stakeholders.
Bridgewood is a trading style of Bridgewood Financial Management Limited (Company No: 07130329) and Bridgewood Financial Solutions Limited (Company No: 06957765). Registered Office: Poynt South, Upper Parliament Street, Nottingham, NG1 6LF. Registered in England and Wales.
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Paul Mallatratt (Licence No. 2039) and Louise Freestone (Licence No. 2030) are licensed to act as insolvency practitioners in the UK by the Institute of Chartered Accountants in England and Wales and are subject to their Code of Ethics, available in English at www.icaew.com[...]code-of-ethics-d
In carrying out the regulated profession of Insolvency, the firm is subject to the Insolvency Regulations and Guidance Notes at www.icaew.com/insolvency and the Statements of Practice at www.icaew.com[...]insolvency-regulations-and-standards