British footwear and clothing retailer L.K. Bennett has fallen into administration, the U.K. equivalent of Chapter 11, putting 500 jobs at risk. The retailer has already shuttered its e-commerce site and five of its stores as well as let go 55 employees.
Consultancy firm, Ernst & Young has been appointed to oversee the insolvency. L.K. Bennett operates about 40 stores in the U.K., and they are also at risk of closing. Ernst & Young said the retailer’s international operations are not included in the administration process.
“Amidst tough trading conditions for retailers, the company has been further impacted by significant rent increases and business rate rises,” said Dan Hurd, joint administrator at Ernst & Young. “[Founder Linda Bennett] and the management team therefore made the difficult decision to place the company into administration, to protect the future of the business.”
Stores in Sheffield, Bristol, Liverpool, and London have already shut.
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The company has been struggling financially: In its latest report on Companies House, the official register of U.K. businesses, L.K. reported a 47.5 million pounds loss in the year ended July 2017. Revenue was 77.4 million pounds.
Like many other British high street — and designer — brands, L.K. Bennett failed to adapt to changes in the retail environment. The company had tried to implement a turnaround strategy and support underperforming sites by renegotiating leases, but it didn’t work.
Despite being a favorite of the Duchess of Cambridge who was often spotted wearing a range of L.K. shoes, dresses and jackets, the brand struggled to compete: Its prices were too high, and similar footwear and apparel could be found up and down the high street at cheaper ones. The brand was also under pressure from a slew of contemporary labels offering fashion-forward designs at similar prices to those of L.K.
In September 2017, Bennett bought back a majority of the company from Phoenix Equity Partners, which had tried unsuccessfully to take the brand upmarket, with glossy ad campaigns, celebrity ambassadors and collaborations, and a beefed-up women’s wear offer.
It also expanded internationally and at its height had 260 stores and concessions in more than 30 countries worldwide.
In its most recent Companies House report from 2017, the retailer disclosed that it is “reliant on financial support provided by founder and shareholder Linda Bennett,” and that it would need between 6 million and 12 million pounds in the form of shareholder loans to support the company in 2018 and 2019.
This story was reported by WWD and originally appeared on WWD.com.
