Baring Asia restructures retailer Cath Kidston

All 60 Cath Kidston stores in the UK will be closed with the loss of approximately 900 jobs. Most of these employees had already been furloughed under a government scheme that supports businesses unable to maintain their workforce due to coronavirus-related disruption. The company’s global wholesale and franchise operations, as well as its online platform, will continue trading.

“Like every retailer, Cath Kidston has faced significant challenges in recent years, including high rents and changing consumer behaviors. These challenges have been exacerbated by the outbreak of COVID-19, which has been impacting the business globally since the beginning of the year,” said Richard Fleming, a managing director at Alvarez & Marsal, in a statement.

Cath Kidston announced earlier this month that it would likely file for administration. Alvarez & Marsal was subsequently appointed to explore options for the business but could not find a way to a solvent sale. The sale back to Baring of the brand, website and e-commerce platform will preserve just over 70 jobs.

Separately, a Japan-based unit of Cath Kidston filed for bankruptcy with Tokyo District Court, local media reported. The company owned about JPY6.5 billion ($60 million) to approximately 400 creditors.

In 2015, Cath Kidston bought back its Japan operations - its largest outside the UK - from local conglomerate TSI Holdings, with a plan to increase the company's local footprint. According to the Cath Kidston website, there are 40 stores in Japan.

Baring acquired a substantial position in Cath Kidston from TA Associates and company management in 2014 with a view to expanding the business in Asia. The deal was said to value the business at around GBP250 million ($426 million). The private equity firm assumed control two years later, taking out TA’s remaining stake.

Starting out as a single shop in London's Holland Park in 1993, Cath Kidston has grown into a global lifestyle brand known for vintage-inspired floral prints. It sells a range of bags, accessories, clothing, homeware and kidswear. In addition to the UK and Japan stores, the company website identifies nearly 90 outlets in other markets, including 73 in Asia. These are run by franchisees.

Brick-and-mortar retailers have been among the hardest-hit by COVID-19. Several UK-based fashion retailers have gone bankrupt, while in Asia, administrators were brought in to oversee Tigerlily, an Australian swimwear brand owned by Crescent Capital Partners. This followed a collapse in sales attributed to COVID-19, but stresses were apparent in the business before the crisis emerged. The Burger King New Zealand franchise, held by The Blackstone Group, has also entered receivership.

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• Topics
• Buyouts
• Write-off
• Consumer
• Asia
• Baring Private Equity Asia