Buy out of Scottish retail chain could save 500 jobs
© The Herald
Originally published: 08.01.2010
by Ian McConnell
Alan Kinney and Jim McGonigle, who saw their Ayrshire-based d2 fashion clothing chain collapse into administration last week, are buying back about 44 of the stores in a deal which they hope will save more than 500 jobs.
About 13 of d2’s 23 Scottish stores are expected to figure in the 44 being bought back by Kinney and McGonigle from the administrators.
The buy-out looks likely to preserve about 180 jobs in Scotland, including the 22 head office staff at Dundonald in Ayrshire who were retained by the administrators from accountancy firm BDO. About 14 warehouse staff at Dundonald – half of the number before d2’s collapse – are being retained.
d2 employed about 110 full-time and 140 part-time staff in its 23 Scottish stores before it fell into administration.
The Herald highlighted the likelihood of Kinney mounting a buy-out, in conjunction with McGonigle, in the immediate wake of d2’s collapse last week. The amount being paid by the pair to buy the bulk of d2 out of administration is not being disclosed.
Kinney and McGonigle between them owned a majority stake in d2 before its collapse, having acquired control of the chain from high-profile Ayrshire entrepreneur Sir Tom Hunter about two years ago.
Bank of Scotland owner Lloyds Banking Group, lender to d2 before its collapse, confirmed last night that it was continuing to back Kinney and McGonigle. It is believed to be rolling over into the buy-out company the debt which it provided to d2 before the chain’s collapse into administration.
The administration and buy-back have allowed Kinney and McGonigle to jettison the poorly-performing stores of d2. This should aid their efforts to make d2 profitable, after years of losses.
It is believed the rental costs at many d2 stores rose sharply during the commercial property boom times, and some of d2’s various landlords may have been reluctant to renegotiate terms.
Kinney and McGonigle, as they move to finalise their buy-out of the 44 d2 stores with which they wish to continue, are now in the process of renegotiating with landlords on these premises.
The administrators of d2, BDO partners James Stephen and Dermot Power, decided to keep all of the chain’s 76 UK stores open while seeking to sell part or all of the business as a going concern.
It is believed they received expressions of interest from about seven parties, before moving swiftly to conclude the deal with Kinney and McGonigle.
A spokeswoman for d2 said last night that there was no update on what would happen with the stores which are not being bought out by Kinney and McGonigle. But it would seem likely that many, if not all, of these will now be closed and the staff laid off.
Kinney now wants to focus d2 more sharply on its chosen youth market, reducing the number of product lines carried.
A spokesman for Kinney said the “final numbers of stores and jobs” preserved by the buy-out would “depend on negotiations with some of the chain’s various landlords, something d2 wants to complete as quickly as possible”.
Kinney said: “We are delighted to come to this agreement...with the joint administrators...This deal is the quickest and most viable way of securing d2 as a business, as well as several hundred jobs.”
He added: “It is clear that the former business could not cope with its continuing trading problems, especially in the light of the ongoing economic downturn and its impact on the high street. The new business will head firmly back to basics, concentrating on the youth market and above all on keeping our costs low. Our stores will be cleaner looking and will carry less stock than in the past.”
d2 was formed in 1999 with the combination by Hunter of former Fosters Menswear shops and Kinney and McGonigle’s Jeans for Sale outlets, and expanded in 2000 with the purchase of some Jeanster stores.
d2 employed about 830 people, about 390 of them part-time, before it collapsed.
The administrators last week laid off half of the previously 44-strong head office staff.