Restructuring of High Street Retailer Staples
2016 has seen a number of retailers close or restructure their stores in the UK, this includes the BHS group, Austin Reed and Banana Republic. The news that Staples is to restructure its business to include the possible closure of a number of its 100 stores is another blow to the High Street.
Staples announced its results for the third quarter, which showed a 4% decrease in its sales compared to the same time last year. The company also recorded a pre-tax loss of £5 million in its annual accounts to January 2015. An increasingly digital workplace has been said to affect sales performance. At the beginning of 2016 the stationary giant had to abandon its $6.3 billion merger with Office Depot due to competition grounds and antitrust concerns.
The company revealed that the UK’s arm has been sold for a “nominal” sum to Hilco Capital- a restructuring specialist. In the UK the stationary specialist employs 1,100 people across 106 stores. Hilco plans to phase out the shops over the coming months, but it is unknown whether all staff will be kept. The licence to the Staples brand will expire in six months, after which the shops will have to be rebranded. Hilco will take on Staples UK’s net debt of roughly £60 million.
Hilco is well known for the rescue of HMV and currently is working on the administration of American Apparel’s arm in the UK. Retail veteran, Alan Gaynor, will lead the team together with current management to build a plan to allow the business to succeed.
This raises more questions about the uncertain state of British retailing but positivity must prevail as with change comes new opportunities.