From Royal appointment to the insolvency catwalk, what next for LK Bennett and its Brexit ‘nightmare’?

 

IT’S the luxury everyday fashion brand favoured by Kate Middleton, the Duchess of Cambridge, as well as her sister Pippa.

George Clooney’s wife, Amal, and singer Taylor Swift have also been photographed gracing the front covers of Hello! and OK! magazines wearing eye-catching outfits created by its designers.

So too have Oscar-winning Dame Helen Mirren, HRH Princess Sofia of Sweden, TV presenter Holly Willoughby, soprano Katherine Jenkins, and Good Morning Britain host Charlotte Hawkins.

But unless a backer can rescue it from mounting financial difficulties, LK Bennett is likely to become the retail sector’s next big name to head along the insolvency catwalk.

The prospect of insolvency has moved it away from the fashion pages – and on to the business pages, as analysts wait to see whether it will follow Hardy Amies, the Queen’s dressmaker, by slipping into administration.

The upmarket fashion brand of LK Bennett has 42 stand-alone High Street stores across the UK, as well as 54 department store concessions. It also has 47 shops and concessions across the US and mainland Europe.

These include several in Yorkshire and the North East, which all share the aim of bringing “a bit of Bond Street luxury to the High Street”.

There is one in Harrogate, three in York, one in Leeds, one at Meadowhall Sheffield, and one in Newcastle. A second Leeds store had already fallen by the wayside amid a previous cloth-cutting exercise.

It had recently tried to strengthen its Yorkshire foothold by staging a series of ladies’ luncheons where there would be a talk about their outfits – and how they could be taken “from desk to dinner” with a simple change of accessories.

Iconic Yorkshire tea room Bettys was among the Harrogate venues that hosted such events in a bid to boost retail sales. A similar event is planned for the West Park Hotel in May.

Around 500 jobs are at risk if LK Bennett does collapse into insolvency and is placed into administration.

It’s a redundancy scenario that represents a major reversal in financial fortunes for the retailer.

In 2008, it sold a majority stake to an equity group in a deal said to have valued the company at up to £100m.

And less than a year ago, the business earned its place in popular culture when Home Secretary Amber Rudd famously declared that the application system for EU nationals who want to remain in the UK post-Brexit should be “as easy as setting up an online account at LK Bennett”.

Now, despite corporate restructuring, the loss-making retailer is fighting for its very survival in a bid to avoid becoming the latest bankruptcy statistic on the High Street.

But for dedicated followers of fashion, the question mark over its financial future comes as little surprise.

As insolvency looms, analysts say it failed to take business recovery action fast enough to prevent it from being immune to tough trading conditions.

As Britons cut back spending on clothing, the cost of running High Street stores has risen sharply – leading many to seek corporate recovery and business support expertise.

And that has created the perfect insolvency storm for LK Bennett and its struggling retail neighbours.

Famous for its signature kitten heels, which start at £175 a pair, the company was founded by the entrepreneur Linda Bennett.

A shoe, bag and ready-to-wear clothing retailer, it spurned the one-size-fits-all approach and instead built its reputation on individuality.

But only last year Ms Bennett, who had loaned the company more than £11m, told one interviewer it was the “biggest risk” she had ever taken – and cited Brexit as a reason for its financial fragility.

“It’s a terrible time. Brexit is really difficult. Now we don’t know if we’re going to have tariffs on the shoes we’re having made in Spain,” she said. “The exchange rate is worse than it’s ever been. From a business point of view, it’s a total nightmare.”

Whether we will see the likes of Kate Middleton and Amal Clooney stepping out in their clothes and shoes again is, for now, shrouded in uncertainty and doubt.

For more information on how our licensed insolvency practitioners and businesses recovery teams in Leeds, Bradford, Harrogate and Darlington can help, please call us on 03300  244 660 or email confidential@walshtaylor.co.uk