Scottish fashion and homeware chain store M&Co, a subsidiary of Mackays Stores Group, has employed Deloitte to search for new investors amid a sales slump.
The company, which employs 2,700 people, is considering a partial or outright sale to be undertaken through pre-pack administration, according to Sky News.
The search for new investors comes after a revenue shortfall of £50m. Sources have said that employees have been spoken to about the potential restructuring.
M&Co CEO Andy McGeoh expressed optimism in a memo and saying that changing retail patterns will see shoppers visiting local stores.
M&Co shops across England, Scotland, and Northern Ireland have reopened, except for those in Scottish shopping centres.
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M&Co would not provide comment, but a representative of the company told Retail Insight Network that it has “no gripes” regarding the allegations made by Sky News.
Where did it go wrong for M&Co?
Like of other fashion retailers including Cath Kidston, Debenhams, and Monsoon and Accessorize, M&Co’s downfall had been exacerbated by the UK lockdown, which was enforced in March to slow the spread of the Covid-19 coronavirus pandemic.
The forced closure of non-essential retail stores was the final straw for many already-struggling retailers, and M&Co had been in financial decline even before the lockdown.
M&Co recorded earnings of £8.7m before tax and an operating profit of £3.6m, a 40% drop, in the year to February 2019. In the same period, net debt went from £19m to £8.7m.
This decline mirrors the pattern many high street bricks-and-mortar retailers have seen in recent years due to a changing retail landscape and the success of e-commerce over physical retail.
Others shops entering into administration
Today also marked UK-based fashion chain TM Lewin and furniture chain Harveys entering into administration.
At TM Lewin, 600 jobs have been lost as the store has said it will be permanently closing stores for the foreseeable future. Its assets have been bought by Torque Brands.
At Harveys, 240 jobs have been immediately lost while 1,300 more are at risk. Over 100 stores will remain open during its restructuring, but 50 stores are set to permanently close. Harveys has appointed PwC as administrator.