UK high street fashion retailer Select has fallen into administration, risking 2,000 jobs across its 180 store portfolio.
Select filed a notice of intention to appoint an administrator six weeks ago and has now confirmed that advisory firm Quantuma will manage the administration.
The struggling fashion chain, which was initially bought out of administration by owner Cafer Mahiroğlu in 2008, has been making a loss for several years due to rising costs and falling sales. Select’s most recent loss was £15.5m on sales of £117m in the 18 months to 2 December, according to accounts filed at Companies House.
Select’s administration filing follows its company voluntary arrangement (CVA), filed last year to cut its rent costs to keep the business afloat.
GlobalData principal retail analyst Honor Strachan said: ‘‘Select is another example where a CVA is not always the saviour for a troubled retailer, with deep-rooted commercial and operational issues beyond the help of a store cost-cutting exercise.
“However, with around 180 stores across the UK, one of the contributors to its downfall, and profit losses, has been the burden of its store estate. Rising costs and high business rates continue to make it extremely challenging for smaller fashion chains to operate profitably, forcing store closures and leading to share acquisition opportunities for the online pure-plays as they can be more competitive on price and still produce better margins.”
Select administration and the retail CVA breakout
The Select administration comes amid the UK’s brick-and-mortar retail crisis. Many retailers, such as Monsoon Accessorize, Debenhams and Arcadia Group have recently fallen in administration, also due to high rent costs and changing consumer behaviours. Shopping centre owner intu said that CVAs had affected its financial performance, upon the release of its trading update for the period from 1 January 2019 to 2 May 2019.
Strachan added: “The young fashion market has shifted so significantly in the last five years, that to its credit Select has managed to hold on until now, but the likes of boohoo.com, Missguided and ASOS, as well as physical players H&M and Primark, have innovated, adapted and responded to the changing needs of the 16-30 female audience – stealing share and leaving Select feeling outdated and lacking relevance.
“Select is the latest fashion casualty in a string of administration and CVA announcements in 2019, and we are not expecting it to be the last. The market will continue to become more concentrated, the high street more decimated and landlords more squeezed.”