“We have applied to court today for a short breathing space to assess our options before moving to appoint administrators,” said CEO Steve Simpson. “There will inevitably be significant cuts and closures as we work our way through this,” he added.
British companies facing insolvency can appoint administrators to provide protection against creditors. But it means handing over control to the administrators, and the process can lead to the business being closed down.
These cuts were announced before local lockdowns and a second wave of coronavirus hit Britain’s malls and main streets, highlighting the uncertain prospects that retail workers face.
Edinburgh Woollen Mill is in a particularly tough position because many of its stores are in the north of Britain, where restrictions have been tightened more than elsewhere. Its customers also tend to be older, according to Patrick O’Brien, head of UK retail research at GlobalData.
EWM Group said it is also having to contend with “false rumors” relating to its business practices, which it said have impacted its credit insurance agreements and hurt its finances. The company has been accused by suppliers in Bangladesh of not paying for goods, according to UK media reports. It denies the claims.
“The reduction in credit insurance, against the backdrop of the initial lockdown, current local lockdowns, and the second wave of Covid-19 reducing footfall have made normal trading impossible,” Simpson said.