Shoe retailer Brantano has gone into administration, putting the future of its 73 shops at risk.
Its owners, Alteri Investors, filed notice of intention to appoint administrators last week. PwC has been appointed to handle the process.
This is the second time the retailer has fallen into administration. In January, following difficult trading conditions, it appointed PwC to run a sale process.
Alteri later bought it out of administration, in a rescue deal to take back 140 shops. The remaining 58 from its original portfolio closed.
How badly could landlords be hit?
Troubled shoe retailer Brantano’s second administration has caused concern that the process is merely a stay of execution, and that the business is no longer viable.
It could leave landlords of its remaining 73-shop estate with more empty space on their hands.
Its collapse follows a spate of insolvencies in the sub-sector that is struggling to adapt to modern shopping habits.
A source involved in the initial administration said: “It is surprising that they have got themselves in this position after such a short period of time. Given that they chose which shops to keep last time shows that it does not matter what they do, it is an unsustainable business model in the long run.”
Rival retailer Shoe Zone has expressed interest in the business, but at the time EG went to press no deal had been agreed. Failure to reach a deal will result in mass store closures.
The shops in Brantano’s estate were those deemed the most profitable during the last administration process. They are predominately in retail parks in the South East. The rest are spread evenly across the county, mostly in retail parks but there are also concessions in department stores and some garden centres.
BRANTANO STORES IN THE SOUTH
| Retail Park | Town | Unit sq ft | Landlord |
|---|---|---|---|
| Victoria Retail Park (Grimsby) | Ruislip | 5,057 | Belgrave Land |
| Beacon Retail Park | Milton Keynes | 8,555 | TH Real Estate |
| Colchester Retail Park | Essex | 10,081 | Standard Life Investments |
| Enham Arch Retail Park | Newbury | 6,049 | La Salle Investment Management |
| Brunel Retail Park | Reading | 10,060 | Aberdeen Asset Management |
| Lyons Retail Park | Worthing | n/a | n/a |
| Vale Retail Park | Aylesbury | 8,248 | Aberdeen Asset Management |
| Holland Market Retail Park | Lincolnshire | 5,057 | Schroder UK Property Fund |
| Templars Square Shopping Centre | Oxford | 8,350 | Kohlberg Kravis Roberts & Co |
| Wellington Retail Park | Waterlooville | n/a | TH Real Estate |
| White Lion Retail Park | Dunstable | n/a | Pradera |
| The Place Retail Park | Milton Keynes | 10,000 | Chartergate Ests |
| Cromwell Retail Park | Peterborough | 8,000 | Cromwell Retail Park |
| Banbury Cross Retail Park | Banbury | 9,761 | Redefine Interntional |
| Serpentine Green Shopping Centre | Peterborough | 6,500 | British Land |
| Phoenix Parkway | Corby | 5,984 | Peel Developments |
Major landlords include retail REITs and fund managers such as Aberdeen Asset Management, Aviva, British Land, M&G and TH Real Estate.
Its shops range between 5,000-10,000 sq ft, meaning they are suitable for a number of out-of-town retail tenants with the larger shops being suitable for bulky goods and furniture retailers.
In the last sell-off process, some shops were split to be relet to multiple retailers, and in some instances landlords were even able to let the space out at a higher rent than Brantano was paying.
At Templars Shopping Park in Oxford, the former Brantano unit was sub-let to two new retailers at a higher rent. Brantano was paying around £32 per sq ft for the shop, which was then sub-let at around £35 per sq ft.
Some landlords see the potential surplus space as an opportunity to drive footfall to retail parks. Chris Daniel, Quadrant Estates, said: “Hopefully this will offer an opportunity to bring in more exciting retailers and improve the offer in retail parks.”
However, landlords with retail parks in secondary locations may find it harder to relet the space.
What’s going on in the footwear market?
Brantano is not alone in its tribulations. Jones Bootmaker, which faces direct competition from retailers such as Russell & Bromley and Kurt Geiger at the higher end of the spectrum is also going through an administration process. Alix Partners, which also owns Jones, is working with KPMG.
The sharp decline in sterling, the rise of business rates and the ongoing shift in consumer shopping habits are just some of the headwinds that all retailers are facing at the moment.
Footwear has struggled particularly, especially in the value segment of the market. Competition from high street fashion branches such as New Look and Primark which stock their own range of footwear has eliminated the need for some consumers to visit a shoe shop.
Paul Langston, consulting partner, CACI, said: “Life is hard for all retailers at the moment but footwear is being particularly squeezed at both ends. The lower end of the market is the most saturated space and when you are up against increasing price pressures with it becomes increasingly difficult.”
Andrew Phipps, head of retail research at CBRE, said: “The challenge Brantano faced came on many fronts. The increase in the living wage, increase in business rates, currency fluctuations challenging their pricing of product but also the growth of footwear within fashion retailers. The likes of Zara, Primark etc all offer footwear at a low price and perhaps are a more fashionable, desirable name.”
Market sources said that footwear retailers across the spectrum have become increasingly picky about doing deals, with many of them re-evaluating their portfolios. Clarks recently instructed Harper Dennis Hobbs to reasses its 500-store estate.
| Retailer | Number of stores | Average sq ft | New stores taken since 2014 |
|---|---|---|---|
| Aldo | 22 | 2,234 | – |
| Clarks | 265 | 3,886 | 13 |
| Deichmann Shoes | 66 | 5,542 | 10 |
| Dune | 28 | 2,121 | – |
| Jones Bootmaker | 22 | 1,670 | 3 |
| Kurt Geiger | 38 | 1,805 | 2 |
| Office | 70 | 3,052 | 11 |
| Schuh | 87 | 3,839 | 13 |
| Shoe Zone | 170 | 2,327 | 11 |
| Brantano | 79 | 6,844 | 4 |
| Total | 847 | 33,320 | 67 |
EG shopping centre and retail park data shows that Brantano has only opened four shops in the past three years. Successful competitors, although still behaving cautiously, have taken more space with Office, Schuh and Shoe Zone all taking more than 10 shops.
The data shows Jones Bootmaker being similarly inactive in terms of acquisitions, taking just three shops in this period.
Although value footwear retailers appear to be struggling the most, the footwear sector’s troubles reflect its inability at times to adapt to a changing market.
Phipps added: “The environment of some shoe shops hasn’t changed for years, but fashion shops have evolved. They need to start being more creative, like the sports retailers have done. Show retailers have been some of the last to catch on and need to start thinking about what they do.”
■ Jones Bootmaker, which is also owned by Alteri Investors, has also filed for administration, appointing KPMG to handle the buying process. The combined struggles of these footwear retailers has raised questions over the future viability of high street shoe shops.
The value footwear retailer has 73 shops, which range between 5,000-10,000 sq ft and are located in retail parks.
Retail REITs and sovereign wealth funds, such as Aberdeen Asset Management, Aviva, British Land, M&G and TH Real Estate, have Brantano shops in their portfolios.
Listed footwear retailer Shoe Zone is reportedly preparing a bid for the business, but no deal has been agreed.
If no deal is agreed then mass store closures will likely be on the cards.
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