ERNST & YOUNG administrators have arranged the pre-pack sale of bed retailer Dreams.
Alan Hudson, (pictured) Craig Lewis and Joe O’Connor, from Ernst & Young were appointed joint administrators today.
Prior to its collapse Dreams had about 266 stores employing about 2,000 staff. Sun Capital Partners has bought 171 stores, with 1,600 staff transferred as part of the deal, for an undisclosed sum – leaving 95 stores and 400 staff behind.
A pre-pack administration is where a business is marketed and a sale of part or all of the business is arranged prior to entering into the insolvency process and sold immediately after administrators are appointed.
Hudson said: “High street retailers have faced unprecedented conditions over recent years, and the market for higher value discretionary purchases has been particularly tough.
“Dreams is a well-known market leader, but in common with many others has suffered as a result of this depressed retail environment, a rapid expansion of its store portfolio and onerous lease liabilities. Whilst recent performance has improved, it has seen a decline in like for like sales across its store portfolio as well as its operating margins being squeezed. This has resulted in the business being unable to continue to operate outside of administration.”
“However, we are pleased to announce that a sale has been completed that sees the majority of the Dreams business including 171 of its stores, its head office and its two UK manufacturing facilities being sold to a new company controlled by Sun Capital Partners. The business will continue to trade without interruption, over 1,600 jobs have been transferred and the future of Dreams on the UK high street has been safeguarded.
“The remaining stores that are not included in the sale will remain open for business whilst the administrators seek to find buyers for these stores.”
According to PwC research published this week multiple retailers closures reached 20 stores a day on average across Great Britain’s town centres in 2012, compared to 14 per day in 2011.
Year-on-year, the net reduction in the number of stores climbed more than tenfold from 174 closures in 2011 to 1,779 closures in 2012.
Analysis of the three months between December 2012 and February 2013 shows that the rate of closures- principally due to high profile administrations including Jessops, Republic, HMV and Blockbuster – accelerated to 28 per day.
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Smith & Williamson has been appointed administrators of charity 4Children