Categorized | Health, Politics, UK

Go Outdoors ‘rescued’ – for now

Financial fancy footwork may allow the chain’s owners to sidestep onerous lease conditions as high street footfall plunges.

Proletarian writers

This retail chain’s owners have found a creative accounting solution to paying the rent: going bankrupt and opening up again under a new name. As the high street comes under increasing pressure, we can expect more of such manoeuvres. Will tenants and homeowners be offered the same get-outs for overdue rents and mortgage payments?

The 2,400 employees of camping and hiking chain Go Outdoors have been unable to plan their futures for months, as vital decisions about their future employment (or otherwise) were being taken behind closed boardroom doors.

Go Outdoors employees can be forgiven for having little or no idea who they are actually working for. It was simpler back in the day when the company started life as the Camping and Caravanning Centre in Sheffield.

Later, company founders John Graham and Paul Caplan acquired Go Outdoors in a management buyout leveraged by backing from YFM Equity Partners and 3i Group. Then in 2016 JD Sports, which also owns Blacks, Millets and Ultimate Outdoors, bought the company.

JD Sports is itself owned by the Pentland Group, which also owns the Berghaus brand! What price ‘free competition’ in the age of monopoly capital?

Before the lockdown struck, qualms over the decision to depart from Go Outdoors’ usual practice of having brand orders delivered direct to each individual shop, instead opening an intermediary warehouse in Cheshire, had already undermined the company, so the enforced closure of all its outlets was the final straw.

By June rumours were circulating that JD Sports was about to throw Go Outdoors to the wolves, calling in the administrators and filing for bankruptcy. But at the eleventh hour, the company fixed up a deal.

“The jobs of most of the 2,400 Go Outdoors employees look safer after the company’s owners put the business into administration and promptly bought it back under a pre-pack arrangement. JD Sports Fashion concluded the deal on Tuesday, in what effectively is a restructuring of Go Outdoors to make it viable.” (Most jobs saved as JD Sports buys back Go Outdoors business in pre-pack deal by Bob Smith, Grough, 23 June 2020)

So having put Go Outdoors into the hands of the administrators, JD Sports swiftly resurrected it, buying it back again for £56.5m. Having by this remarkable sleight of hand created a ‘new’ company, it now proposes to decant existing staff into this restructured version of Go Outdoors.

The main aim of the exercise seems to have been to allow the chain to sidestep commitments to pay high rents and honour long leases for its 67 stores, particularly now that the covid lockdown has exacerbated the ongoing decline of the high street.

“We look forward to having positive conversations with landlords and agreeing new flexible lease contracts which reflect the widely reported challenges of reduced consumer footfall,” said a statement from the owners.

To what extent footfall will recover now that Boris has exhorted us all to “get out and shop” remains to be seen.

Meanwhile, staff celebrations are likely to be muted. It seems that the provisional arrangement is only valid for a year, and JD Sports says only that it intends to “preserve as many jobs as possible”.

Meanwhile the 2,400 workers whose jobs are on the line can be certain of only one thing: that they will be the last to know what the kings of high finance have planned for them next.

As pressure mounts on the high street, we can expect more of such manoeuvres from the big chains. But one thing we can be sure of is that no such opportunities for evading onerous debts will be offered to struggling small businesses, homeowners or renters.

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