Once again, Chinese interests take possession of a coveted European brand name. Byland, the Chinese franchisee of LK Bennett, has taken over the brand and certain other U.K. and Irish assets of the well-known British footwear and clothing retailer, positioned in the upper-middle segment of the market. Byland said it plans to expand the brand to new markets, although the sale doesn't include the company's existing foreign subsidiaries. The U.S. subsidiary filed for bankruptcy protection at the beginning of this month.
The price of the transaction was not revealed. As part of the deal, 15 stores will be closed down, reducing the number of directly operated units to 21, plus the company's website. In particular, the shutdowns will affect expensive locations in the Covent Garden, Kings Road and Knightsbridge areas of London. The fate of the brand's 200-odd franchises and concessions in the U.K. and the rest of the world could not be learnt. Its online stores suspended operations last month.
In the deal, Byland's controlling shareholder, Rebecca Feng, was advised by Darren Topp, who served as chief executive of LK Bennett for 18 months until one year ago, when he was replaced by Erica Vilkauls. Topp and Andrew Ellis, the company's former finance director, will be involved in the management after the change of ownership.
LK Bennett filed for administration, a form of bankruptcy protection, with Ernst & Young prior to the sale. Besides a Dubai-based billionaire, Philip Day, another major British shoe retailer, Dune, and Sports Direct International, the company controlled by Mike Ashley, were said to have been among the bidders, along with Linda Bennett herself.
The company was founded by Linda Bennett in 1990. Capitalizing on high mark-ups on private-label women's shoes, many of which were sourced in Italy, she built the banner internationally, adding franchises and concessions in the U.K., the rest of Europe, the U.S. and Asia.
She sold her business in 2008, when it consisted of 90 stores, but eventually bought it back in 2017, as its results had deteriorated after three changes in the top management. Reportedly, she had received £70 million (€80.8m-$91.2m) when she sold her company to Phoenix Equity Partners and Robert Bensoussan, the former CEO of Jimmy Choo, but she paid only £3 million (€3.5m-$3.9m) to get it back two years ago. She injected £11 million (€12.7m-$14.3m) into the company after it posted a loss of £48 million (€55.4m-$62.6m) for 2017.
The company still made an operating loss of £5.9 million (€6.8m-$7.7m) on revenues estimated at £92.3 million (€106.5m-$120.3m) in the financial year ended in July 2017, but the results probably deteriorated further last year. Apparently, like other British retailers, LK Bennett has been a victim of high leases and dwindling consumer sentiment. Observers also felt that its shoes were overpriced, even though they were known to be worn by celebrities.