About 1,600 jobs are to go at Bonmarché after Sun European Partners acquired the plus-size retailer out of pre-packaged administration for £10m yesterday, continuing the private equity firm's buying spree in retail.
The job losses will largely come from Sun European's closure of more than 160 of 394 shops at Bonmarché, the stablemate of the discount chain Peacocks that also collapsed into administration last week. A number of jobs at Bonmarché's head-office in Wakefield will also be jettisoned.
But Sun European is acquiring about 230 of Bonmarché's stores from the administrator KPMG, saving about 2,400 jobs at the value retailer that targets women over 45 years old.
The private equity firm used the controversial pre-packaged administration to wipe out Bonmarché's debt and loss-making stores.
The outlook for Peacocks, which also employed 9,600, is far more uncertain, particularly as it accounted for the bulk of the Peacock Group's £240m of debt. KPMG, which is also handling its administration, made 249 of 515 head office staff redundant last week. KPMG yesterday opened the data room on the value fashion retailer, and Sun European is understood to also be among parties interested in Peacocks.
Other private equity firms, including KKR and Permira, are thought to be weighing up their options for the Cardiff-based chain, as are some trade players, such as Select Retail. However, a substantial number of Peacocks' stores will almost certainly close.
Bonmarché was acquired by Peacocks in 2002. Four years later, the Peacock Group loaded up the company with debt in a £420m buyout that took it private. The deal was backed by two hedge funds, Och-Ziff and Perry Capital, as well as the Wall Street investment bank Goldman Sachs.
But Sun European yesterday struck an upbeat tone on Bonmarché 's future.
Matthias Gundlach, the vice president at Sun European, said: "Bonmarché is a great brand that operates in an attractive niche of the apparel sector that we know very well... Bonmarché has a loyal customer base of regular repeat buyers.
"We are confident in putting a sustainable growth programme in place and working with the management team to develop the business successfully." It is believed that the existing pension schemes for Bonmarche's employees have been protected by the pre-pack deal.
Sun European has made a series of retail acquisitions in recent months that target the lucrative older market, including the fashion group Irisa (formerly Alexon), the golf specialist American Golf, and the female clothing retailer Jacques Vert. Its acquisition of Alexon, which included the Dash, Eastex and Kaliko brands, was also through a pre-pack administration.