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Bankruptcy Bug Bites Euro Retailers Oasis, Warehouse and MQ

The COVID-19 outbreak is proving the mantra of Darwinian theory that only the fittest survive.

This week, British fashion retailers Oasis and Warehouse have fallen into administration—the U.K. equivalent of filing for bankruptcy—just one week after fellow U.K.-based chain Debenhams filed for the second time in a year’s span. Oasis and Warehouse have laid off more than 200 employees and put another 1,800 on furlough as the effects of COVID-19 loom large.

Deloitte confirmed that two of its restructuring partners, Rob Harding and Richard Hawes, have been named joint administrators to Oasis and Warehouse Limited throughout the process, Reuters reported. Deloitte will also wind down The Idle Man Limited, a British online men’s wear brand that Oasis and Warehouse acquired in September. For now, the Oasis and Warehouse brands will continue to operate online in the short term while options for the future are assessed.

Until the coronavirus lockdown, the group operated 92 standalone stores and more than 400 concessions within department stores including Debenhams, Selfridges and House of Fraser. The owner of the brands, Icelandic bank Kaupthing, had been in talks to sell the businesses before the pandemic.

The economic impact of COVID-19 throughout the U.K. is anticipated to be significant and has hit retailers across the nation hard as stores remain closed. According to estimates from data and analytics consultancy GlobalData, the impact of the virus will wipe £12.6 billion ($15.7 billion) from total U.K. retail this year.

Fashion and home furnishings retailer Cath Kidston, which operates 60 stores across the U.K., filed for administration earlier in April, while apparel and home decor merchant Laura Ashley permanently closed 70 of its 147 U.K. stores amid filing for administration in early March. Both retailers are still seeking a buyer, with the pandemic making it difficult to obtain financing to fund their operations.

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According to the Centre for Retail Research, approximately 20,620 stores in the U.K. will shutter this year, 27.1 percent more than last year, with job losses totaling 235,704, a 61.5 percent increase from 2019.

Bankruptcies aren’t just affecting major retailers in the U.K. amid slowing sales from the COVID-19 pandemic. For one, Galeria Karstadt Kaufhof, Germany’s biggest department store retailer, filed for administrative insolvency on April 1.

Most recently, Swedish fashion retailer MQ filed for bankruptcy Thursday, with the company stating the decision was based on a significant decrease in sales in March and early April, as well as expectations of a longer-term impact on the consumer market even after the pandemic subsides.

The fashion retailer was struggling prior to the pandemic as well—MQ’s sales in the three-month period of December, January and February shrank 10 percent to 382 million krona ($38 million).

On March 25, as the outbreak intensified across Europe, MQ reduced store hours and staffing, “increased allocation of product supply for online shopping” and instituted no-charge shipping and returns for e-commerce customers in response to “clear growth” in its digital channels, the company said.

But MQ’s online sales have not been able to offset transactions that would take place in physical stores, the company said Thursday, adding that it does not believe it’s possible to obtain additional financing. MQ operated 159 physical stores in Sweden, including 40 under its Joy banner, which already filed for bankruptcy in February.

The company has proposed Lars-Henrik Andersson, member of the Swedish Bar Association, from the law firm Cirio, as its insolvency administrator.