Everything you need to know
Hawkins Bazaar, the 47-year-old toy and novelty store is in the hands of an administrator for the second time in ten years.
In 2011, the company closed two thirds of its store network before reemerging and was acquired by a private equity company called Merino in 2016 but they haven’t been able to turnaround the company.
The business made a loss in 2019 of close to £1 million despite overall sales of £15.3 million, which itself was down £1 million from the previous year.
The stores will continue to trade until further notice but it’s not good news for the remaining staff and suppliers.
Chris Horner, Insolvency Director with BusinessRescueExpert, said: “Hawkins Bazaar and a lot of retailers were banking on a bumper Christmas to ride to the rescue of their balance sheets and the reports we’ve seen coming out this month indicate that for a lot of them, it just hasn’t happened.
“Total UK toy sales were down 6% in 2019. This is a similar level of decline to the previous year so it can’t be said to be a one-off blip.
“It’s interesting that Argos have identified the absence of a clear must-have game or gadget this year as contributing to an overall slump in their Christmas sales and as a new dad myself, I couldn’t see the equivalent of a Furby or a Fidget Spinner that everyone had to have.
“All retail stores are facing increased threats on multiple fronts including dwindling high street footfall, high rents, increasing business rates and rising staff costs including a pegged minimum wage rise due to come in on April 1st.
“Throw in a disappointing Christmas period and further Brexit uncertainty that will continue past January 31st and it’s a bleak picture for retailers.
“In our review of the retail year, we highlighted several other industry-wide trends including falling retail employee numbers that have reduced in every consecutive quarter since the end of 2015 with the Centre for Retail Research tracking close to 10,000 retail job losses announced this month alone.”
When it comes to the possibility of turning Hawkins Bazaar around, he thinks there’s some obstacles stacked against them.
“Their Website is back online after originally going dark and the physical stores remain open – including still accepting gift cards for a limited period but it’s going to be tough.
“Their branding is now promoting a ‘50% off, closing down sale’ which if nothing else will contribute to a negative feedback loop.
Even if they are giving a serious push to selling the business as a going concern or thinking of a restructure and rescue plan, this will reinforce the impression that they’re closing which will then make it harder to attract customers and sales.
“It’s a shame for employees who are facing redundancy and landlords who will now have empty properties to fill. It’s also important to stress that administration does not automatically mean store closures.
“There are several tools and tactics administrators and insolvency practitioners can use to rescue an otherwise fundamentally sound business and get them back on their feet eventually, and the Administration gives the breathing space to see what’s possible.”
Administration works
Administration is one of the most widely misunderstood business situations there is. It’s not an immediate death sentence or liquidation of a company, nor is it a magic bullet that immediately absolves owners and directors of all financial debts and responsibility for their decisions.
It’s a chance for an otherwise sound businesses to buy some breathing space to restructure their situation and give them the best chance of returning to a profitable future.
If you think your business could benefit from some expert knowledge and advice on how to turn around a trading downturn – get in touch with us.
One of our expert advisors will arrange a convenient free initial consultation with you to better understand the constraints and challenges your company has.
They can then work with you to plot out an efficient and effective recovery process to give you and your business the best chance of rebounding.