The iconic Joplings store in Sunderland

Department and home store retailer Vergo Retail has gone into administration, placing a question mark over the future of the 19-store business – including the iconic Robbs department store in Hexham and Joplings in Sunderland.   

Sarah Bell and Steven Muncaster, partners at MCR, have been appointed joint administrators, with the stores set to trade as normal while the company’s position is reviewed and a buyer sought. However, the middle of a recession is barely the best time to be selling an ailing retailer, as MCR’s recent experiences with Ethel Austin and the kidswear retailer Adams demonstrate. 

While Ethel Austin limps on as a rump of 90 stores, Adams has vanished from the high street completely (though is reportedly due to return in the autumn). For the sake of Vergo Retail’s 900+ employees, a happier outcome must be hoped for this time; sadly, however, the chances of any purchaser snapping up the entire loss-making Vergo chain is surely slim. 

Vergo's Robbs of Hexham store

It’s all a far cry from the hope and expectation that has accompanied the recent growth of the Vergo Retail business. As regular readers of Soult’s Retail View will know, Vergo Retail had an acquisitive 2009, snapping up a succession of closure threatened Co-op department and home stores. These were added to the portfolio of three large department stores – Robbs, Joplings and Lewis’s – that it rescued from the brink of closure following the administration of Owen Owen in 2007. 

Back then, it was difficult trading at Lewis’s that brought the whole Owen Owen business tumbling down, despite Robbs and Joplings both reportedly being profitable. This essence of a decent business provided some logic to the scenario of David Thompson – who had taken Owen Owen into administration in the first place – buying the business back under the new Vergo Retail banner. 

This time, despite the previously announced closure of the flagship Lewis’s store in Liverpool (set to close by June this year, ostensibly due to the impending redevelopment of the building by its owners Merepark), it seems that Vergo has simply ran out of time – and money – to turn its enlarged business over to profit: 

“Unfortunately the Company has endured periods of financial loss. It has made efforts following the recently announced closure of the Lewis’s store in Liverpool, to seek new finance to restructure the business but has been unsuccessful in finding a going concern solution. Like many retailers, it has experienced a difficult trading environment during the economic downturn.” (MCR*)  

From a North East perspective – and that of an occasional shopper in both Robbs and Joplings – Vergo’s collapse is a cruel blow to the dedicated, friendly and hardworking staff in those stores who have worked so hard to bring them back to life over the last three years. 

Equally, as the Hexham Courant reported on Friday, it’s devastating and unacceptable to those concession holders who look set to lose out on getting what they are owed – in a repeat, for many, of what happened when Owen Owen went into administration – due to all payments passing through Vergo’s own tills. 

Even if Robbs is saved, those concession holders who are reportedly owed thousands of pounds can be forgiven if they think twice about staying put – assuming, of course, that their small businesses even survive the hit. The variety of concessions, including many independents, is a core part of Robbs’ appeal, and any new owner will need to work hard to win them over. 

For now, however, we must just watch, wait, and – if we wish them to survive – do our best to support the threatened stores at this most difficult and uncertain of times. 

UPDATE – 11 May 2010: The administrators have announced today that nine of Vergo Retail’s loss-making stores – including Robbs and Joplings – will close within four weeks. Joplings was established in 1804; Robbs in 1819 – events over the next four weeks will determine whether or not 2010 sees the sad end of both these iconic department stores. 

* UPDATE – 21 May 2010: Financial information released by MCR^{[broken link removed]} shows that, for the year ended 26 January 2008, Vergo Retail made a total loss of £2.416m from a turnover of £15.824m. This, of course, was based on only the three stores that were in the Vergo portfolio at the time – Robbs, Joplings and Lewis’s.

Ethel Austin, Bishop Auckland

Reports that value fashion retailer Ethel Austin and its sister homewares business, Au Naturale, are poised to enter administration – less than two years after both chains were rescued from previous administrations - is sad and disappointing news, as well as being quite surprising in its timing. 

True, there has been talk of an impending refinancing deal for a week or two, following suppliers’ alleged complaints about not having received payments that were due before Christmas. However, the retailer had reportedly “vehemently denied that it was in trouble”, and has recently been opening stores at quite a pace – 30 to 40 in the last few months, according to the Independent. 

Indeed, as recently as last week Ethel Austin was announcing new store openings, its planned move into the former Woolworths premises in Carmarthen following its acquisition of more than 20 other Woolies sites nationwide over the last twelve months, such as Huddersfield, Fishponds in Bristol, Stone in Staffordshire, and Leven in Fife. 

Ethel Austin store, Byker

I can’t recall ever entering an Ethel Austin store, so it’s difficult for me to comment on what might have gone wrong, though it’s fair to say that many of the more established shops that I have spotted – in places such as Byker or Seaham – haven’t occupied great locations. I’ve always quite liked Au Naturale though, and was disappointed to hear only this week that its Washington Galleries store was closing down. Its stock is largely cheap and cheerful, but it’s always been a good place to go for reasonably priced, decent quality home accessories such as cushions, baskets, vases and coasters. 

Hopefully, whatever fate awaits Ethel Austin and Au Naturale, the future of as many stores and jobs as possible can be secured. However, as with childrenswear retailer Adams – currently in administration for the third time in three years – you do have to question how far a business that has repeatedly collapsed into administration is really worth saving. It suggests, surely, that something is fundamentally awry with the business model or brand. 

Indeed, think about those retailers that have been rescued from administration in recent years, and it’s much easier to bring to mind those that have later collapsed again – such as MK One, MFI and, only this week, jewellery retailer Diamonds & Pearls – than it is to think of any chain that has truly gone on to thrive. Little wonder, perhaps, when retailers are so often bought out of administration – in a pre-pack or otherwise – by the same individuals who took them into administration in the first place.