Edinburgh Woollen Mill (EWM) yesterday emerged as the saviour of 6,000 jobs after acquiring part of the failed Peacocks discount fashion chain.
EWM has bought 338 stores out of administration but 3,100 staff lost their jobs as 224 stores were closed with immediate effect.
In Scotland, 15 stores will remain open while 30 have closed with an estimated loss of around 400 jobs. The price EWM paid for the stores was undisclosed.
EWM was a surprise bidder for Peacocks, a private equity-backed company which collapsed into administration under its £700m debt mountain in the biggest retail failure since Woolworths, placing 9,000 jobs in jeopardy.
Administrator KPMG had renewed talks with EWM in recent days after a potential £25m deal fell through with Pakistani textile billionaire Alshair Fiyaz, who was thought to be the sole bidder for the chain just last week.
Philip Day, the chairman and chief executive of EWM, held out hope that further jobs could be saved despite the immediate closure of the 224 stores.
He said: “We do hope that there will be scope to save more jobs and stores from those being forced to close now due to performance issues and overhead pressures.
“As you can imagine, there will be a considerable amount of work to undertake over the next few months to stabilise the situation, turn this business around, get the supply chain moving again and excite the customers with great products.”
The acquisition includes 338 stores, 57 concessions, three distribution centres and the head office operations in Cardiff. Around 250 head office staff were previously made redundant when the company entered administration on 19 January.
John Gorle, national officer for the shopworkers’ union Usdaw welcomed the deal but said the loss of 3,000 jobs was “one of the worst redundancy situations of recent years with Scotland being particularly hard hit”.
“Usdaw will be seeking a meeting with Edinburgh Woollen Mill as soon as possible to discuss its plans for the business,” he added.
The Langholm-based EWM has been leading an aggressive expansion, picking up troubled retail assets such as home wares chain Ponden Mill and linen shop Roseby’s, which it merged into Ponden Home in 2010.
In June it bought failed retailer Jane Norman, but later missed out on a deal to buy troubled outdoor wear retailer Blacks.
Barclays, the last of Peacocks’ original trio of lenders, and Santander backed EWM with funding for the acquisition.
Day intends to continue trading the stores under the Peacocks brand.
The administrator said that the retailer had failed due to the “decline in consumer spending due to the tough economic conditions...a surplus of stores and unsustainable capital structure”.
In 2007, Peacocks’ chief executive, Richard Kirk, took the company private in a highly leveraged £405m deal with Goldman Sachs, the investment bank, and Och-Ziff and Perry Capital, two hedge funds.
It is thought that two of its lenders, the Royal Bank of Scotland and Lloyds Banking Group, put the firm into administration after talks to restructure £240m of debt failed.
Last year EWM made a £12.5m pre-tax profit on sales of £196m.
Day staged a £67.5m management buy-out of EWM in 2002 and the group is now owned by him and his family.
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