The latest lockdowns in the U.K. have clouded the future of yet another retailer. High street footwear and accessories retailer Dune London has launched a company voluntary arrangement (CVA), following a strategic review of the business.
Founded in 1992 by CEO Daniel Rubin as a small concession store on London’s iconic Oxford Street, Dune London currently operates across 43 stores and 175 concessions in 25 countries, and employs around 1,200 people
While the global lockdowns have been known for accelerating the demise of many footwear and apparel retailers that were already struggling, especially in the case of U.K.-based traditional stores like Debenhams or Arcadia Group’s stable of brands, Rubin indicated that Dune was “trading robustly” prior to the pandemic and that the halting lockdowns have had a severe financial impact.
However, some of the struggles at these other retailers did have an impact on Dune’s business, which operates officially as The Dune Group. For example, Dune has some concessions inside Debenhams stores, which are currently up in the air for liquidation after Boohoo purchased the brand’s IP but not its brick-and-mortar assets.
Given the uncertainty going ahead regarding when non-essential U.K. businesses will be open again, Rubin admitted that the retailer is “now in a position where we need to seek additional support if we are to protect our business.”
“After 28 years of successfully growing the business, this is not an action that we wished to take,” Rubin said in a statement. “However, although we have seen exceptional growth in our online business, it hasn’t been sufficient to offset the loss of sales from our stores being closed.”
A CVA is designed to allow insolvent retailers to either settle debts by paying only a proportion of the amount that it owes to landlords and creditors, or to come to some other arrangement with creditors over debt payments. The plan for Dune is to establish talks with landlords over the possibility of changing its store estate to a sales-based rent model.
If approved, the CVA will see no immediate closures across Dune’s store base. The retailer is undertaking a financial and operational restructuring program supported by its existing financial stakeholders with amended banking facilities, conditional on the approval of the CVA.
A growing list of British fashion retailers have launched CVAs in the past year as they look to mitigate the impact of the pandemic and ease tensions with their landlords, including Hotter Shoes, LK Bennett, Moss Bros, Clarks, New Look, AllSaints, Monsoon, Accessorize, Bair Group and Ann Summers.
Dune’s arrangement comes only two months after the retailer opened a new flagship store in 100 Liverpool Street, a new premium retail hub situated in the Broadgate neighborhood of London. The 1,646-square-foot location showcases the brand’s ladies, men’s and accessories collections and includes a suspended ceiling feature that aims to create a visual draw from the entrance to the rear of the store and provide an “Instagram moment” where customers will be able to view and photograph the hero products on the suspended display.
If Rubin is to be taken at his word, that store isn’t going anywhere. The one major positive that the CEO shared in his statement was that The Dune Group remains “firmly committed” to the high street.
“Indeed, in the longer term, our strategy is to grow our high street presence and adapt our business model with our concessions partners,” he said.
Will Wright and Chris Pole from KPMG’s restructuring practice are the proposed nominees of the CVA.
“While there is increasing hope that restrictions will be eased later in the spring, the reality is that a number of high street operators have little option but to take urgent steps to address their fixed cost base now if they are to make it through the next few months,” Wright, the head of regional restructuring at KPMG, said in a statement. “The proposals launched by Dune today are no exception, and if approved, would give the company that vital lifeline to see them through the uncertain weeks and months ahead.”
Retailers like Dune London and many others have needed this kind of lifeline, especially given the state of the U.K.’s economy since the pandemic struck. Gross domestic product shrank 9.9 percent for 2020, the country’s Office for National Statistics said Friday, the largest annual decline among the Group of Seven advanced economies and the largest drop in more than 300 years, according to Bank of England data, though the preliminary estimate is likely to be revised. Economists expect the nation’s economy to shrink again in the first quarter with the lockdown still in place.
Springboard, which tracks footfall, says recent data points to signs of “lockdown fatigue.”
“Despite rain covering much of the UK last week, footfall in retail destinations rose from the week before; the third consecutive week in which footfall has increased and by far greater an uplift than in the previous seven day period,” Diane Wehrle, marketing and insights director, for the traffic-tracking firm said Tuesday. “Increases occurred across all three destination types, but were particularly noticeable in high streets where they reached double digits in all but three geographies.
Whilst large city centres have taken the biggest hit, footfall still rose in marginally regional cities and by double digits in Central London,” she added. “With shopper activity increasing for the past three weeks despite all but essential stores remaining closed, the results are delivering ever more compelling evidence of escalating lockdown fatigue.”