Knickerbox shops hit crisis at Christmas

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The slowdown in consumer spending in the run-up to Christmas claimed its first corporate victim yesterday when Knickerbox, the lingerie retailer, called in the administrators. The company blamed poor trading in the last few weeks before Christmas which had caused a cash-flow crisis. Nigel Cope, City Correspondent, reports on an unseasonal high-street malaise.

Buchler Philips have been appointed administrators at Knickerbox which will continue to trade normally from its 27 branches on high streets and railway stations. Simon Freakley, at Buchler Philips said he was confident that a buyer could be found and that several expressions of interest had already been received.

"Fundamentally we have a strong brand in a well established niche that has potential in its marketplace."

Knickerbox was launched in 1986 by two former Marks & Spencer employees, Janie Godber and Stephen Schaffer. It recorded sales of pounds 13m last year.

Gieves Group, the 200 year-old Savile Road tailor bought a 49.5 per cent stake in February last year. Gieves shares have been dented by Knickerbox's poor performance and fell a further 1.5p to 36p, a new 12-month low. They stood at 82p last year.

Knickerbox experienced a poor Christmas last year and announced a pounds 2.7m management restructuring-structuring. Buchler Phillips said the management had been doing the right things such as upgrading the stores but had been caught out by poor consumer spending. The directors applied for the administration order themselves.

The collapse of Knickerbox is the most serious evidence yet that this Christmas has not lived up to retailers' high expectations. It follows profits warnings from Oasis Stores and Mulberry and an economic survey suggesting the January sales will offer shoppers record bargains because shops have over-stocked.

Retail experts have blamed the slowdown on higher interest rates, increased taxes and the evaporation of the building society windfall money. However, John Lewis Partnership yesterday said that though trading had come very late, its targets should be met. Brendan O'Callaghan, director of trading at John Lewis' department stores said: "It looks promising but it will go right to the wire. We will need to trade strongly until close of business today. He said traditional gift items such as perfumes, books and fashion had done well. Electrical goods had not performed so strongly.

John Lewis' department stores sales had been running 4 per cent up on the previous year against a cumulative increase of 7 per cent. Mr O'Callaghan said a good final week should push the average December figure to a 6 per cent increase.