Fashion

Superdry and Monsoon “most at risk” to collapse due to Covid-19


The UK high street was already feeling the strain before the coronavirus
pandemic, but in recent days household names including Cath Kidston and
Debenhams have already expressed that they are in trouble, and a new study
has revealed that retailers Superdry and Monsoon Accessorize are “not
likely” to survive due to Covid-19.

The study by AskTraders takes a comprehensive look at the impact
coronavirus is having on the high street through an analysis of more than
20 of the UK’s businesses that it classes are “most at risk”, taking into
account everything from historic problems to a lack of consumer confidence,
underinvestment and the inability to adapt digitally, and predicting the
future for these businesses and their likelihood of survival.

The two high-street brands most at risk would be Superdry and Monsoon
Accessorize, explains AskTraders, as analysis shows that as online sales
have struggled for both retailers it could mean that the nationwide shut
down due to Covid-19 serves as a final blow for these two businesses.

AskTraders senior market analyst Nigel Frith, explained that Superdry is
at risk as it has issued “countless” profit warnings and its shares are
down 11.69 percent and they are seeking additional financing to secure
recovery. In addition, Frith states that the retailer’s online sales have
slumped, and unlikely to make up for the loss of high street customers.

On Superdry, Frith added: “From seeing intense promotional campaigns
from competitors throughout the Christmas season and a reduction in the
inventory stock online and in-store Superdry are just not seen as
fashion-forward by customers anymore. The company predicts losses for 2020
with online sales not able to offset the closure of stores due to
Coronavirus. Their future looks doubtful.”

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Also in jeopardy is Monsoon Accessorize, which Frith states were already
“feeling the pinch of the high street” with slow growth in online sales and
the inability to keep up with demand.

Frith added: “Prior to the pandemic, the company was struggling in a
consistent critical condition, despite securing a CVA. Monsoon Accessorize
has also recently deferred all rent payments for their brick and mortar
stores whilst they remain ‘temporarily’ closed, as the Covid-19 outbreak
weighs heavier and heavier on high street fashion.

“Unless co-owner Mr Simon injects more cash, around an additional 18
million pounds, then the future looks bleak for Monsoon Accessorize, unless
they are able to sell.”

It isn’t just individual shops that are feeling the decline in trade
from Covid-19, AskTraders study also reveals that shopping centre giant
Intu is also “not likely” to survive the crisis as it was already in 4.5
billion pounds of debt prior to the outbreak of coronavirus and are now
feeling this weight even more.

Frith explained: “Having only received 29 percent of rent this month
after the government imposed that rents could be deferred without eviction
for three months, the company has asked for support. With the virus having
a direct effect on footfall and even the future of shops renting from Intu
the company is in a difficult position. This reduction in rents could be
the final straw for Intu, seeing them on the edge of collapse.”

Covid 19: Next, Marks and Spencer and Ted Baker at risk

Superdry and Monsoon “most at risk” to collapse due to Covid-19

Other retailers that AskTraders predicts will be hit the hardest by the
coronavirus measures includes Next, Marks and Spencer, and Ted Baker, all
of which are only classed as “likely” to survive the crisis.

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Next was already coming up against a reduction in consumer spending and
online competition before the lockdown, and while 2020 was going to see the
company invest and develop in its website and distribution whilst also
increasing its product offering, Covid-19 has impeded that. The retailer
has not only shut down stores but also made the decision to temporarily
close its website and operations in order to protect their employees.

“Prior to this Next’s sales had been up 14 percent online, but as they
seek a buyer for Next HQ in order to raise the cash to protect their stores
could this decision to protect this staff have a positive effect on their
own consumer confidence in the future?,” added Frith. “They have a 50/50
chance of survival.”

For Marks and Spencer, AskTraders says it may be a “British icon” but
that doesn’t mean it isn’t at risk of collapse, with the analysis
suggesting only a “likely” chance of survival.

Commenting on Marks and Spencer, Frith said: “As they temporarily close
some of their stores, reduce investment and delay staff pay rises Marks and
Spencer could survive the impact Covid-19 has had on trading. But as their
share price drops down to 50 percent so far this year, could Coronavirus be
the final nail in M&S’s coffin?”

Superdry and Monsoon “most at risk” to collapse due to Covid-19

While for Ted Baker, it is another 50/50 chance of survival, as after
previously overestimating the value of their inventory stock, the retailer
issued four profit warnings throughout 2019, and its shares slip, however,
the sale from their head office to repay existing debt may give them some
breathing space.

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“With sharp decline following the announcement of the sale and leaseback
of their head office for 72 million pound net alongside the closure of 384
or their 416 stories due to Coronavirus. So as the business unravels we are
unsure if Ted Baker will endure the Corona Crisis,” explains Frith.

Images: FashionUnited



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