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Beales department store chain goes into administration, putting 1,050 jobs at risk

Ben Chapman
PA

Department store chain Beales has gone into administration putting the future of its 23 branches and 1,052 full-time staff in doubt.

The 139-year-old company has appointed KPMG to handle the process, which comes after disappointing Christmas trading and rising costs including business rates.

Beales stores will continue to trade during the administration and all members of staff have so far been kept on.

Beales, founded in Bournemouth in 1881, becomes the latest victim of tough trading conditions on UK high streets. Like a number of other retailers, it had been trying to negotiate rent reductions with its landlords.

Debenhams went through an administration process known as a pre-pack last year while House of Fraser is set to close stores under the ownership of Mike Ashley’s Sports Direct.

Beales chief executive Tony Brown accused local councils of failing to help struggling retailers.

He told the BBC last week: “We’ve only managed to get one council to help us out on a temporary basis.

“Landlords – not all of them but predominantly most of them – have been helpful and they see a long term.

“Now don’t get me wrong, the high streets do need to develop, but there has to be a timescale on which that’s done by.

“At the moment, in my view, councils really don’t care, because they get their business rates whether we’re there or not, because the landlord pays if the store closes.”

Robert Hayton, head of business rates at real estate adviser Altus Group, said: “Expensive rents which in turn drive high business rate liabilities, large staffing needs, and leases that are difficult to give up have hampered department store operators’ struggles to adapt to the challenging retail climate.”

“There are now a third fewer large department stores than there were a decade ago.

“Once empty landlords face the challenge of repurposing these outdated spaces and while some have been converted into smaller shop units many have been demolished or sit vacant.”

Keely Rushmore, Partner at SA Law said employees would face an anxious time waiting to find out the result of administrators’ efforts.

The first 14 days of the administration are crucial, Ms Rushmore said, because any employee dismissed in this time will be put to the back of the queue with other “ordinary creditors”, although the entitlement to outstanding wages and redundancy payments remains.

“Employees retained beyond this two-week period become ‘preferential’ creditors, and are in a stronger position, with improved chances of recouping any monies owed.

“The silver lining for Beales’ workers is that it has been confirmed that all staff will be retained while a buyer for the business is sought.

“Going forward the employees’ positions will then largely depend upon whether the administrators, KPMG, succeed in finding a buyer.

“If the business can be sold, the TUPE legislation would normally apply, with employees’ employment transferring to the buyer with their employment rights protected, although there is still the risk of redundancy following the sale if the business is restructured.”

KPMG was first brought in last month to look at options to sell Beales or refinance its debts but no solution could be reached.

Will Wright, partner at KPMG and joint administrator, said: “For over a hundred years, Beales has been a stalwart of the high street in market towns up and down the UK, but like countless similar retailers, has found trading in recent times to be incredibly tough.

“With the impact of high rents and rates exacerbated by disappointing trading over the Christmas period, and extensive discussions around additional investment proving unsuccessful, there were no other available options but to place the company into administration.

“Over the coming weeks, we will endeavour to continue to operate all stores as a going concern while we assess options for the business, including dealing with prospective interested parties. During this period gift vouchers, customer deposits and customer returns/refunds will continue to be honoured.”

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