Retailer Republic poised to fall into administration

Kasmira Jefford
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REPUBLIC, the youth fashion retailer, is poised to become the latest high street name to collapse into administration, putting 1,000 jobs and 121 stores at risk.

Ernst & Young has been lined up as administrators and the appointment is expected to be confirmed this morning.

The group’s demise marks the latest in a string of casualties since the start of the year after Jessops, Blockbuster and HMV all entered administration, with more than 10,000 staff made redundant.

The chain, which is owned by US private equity giant TPG, has struggled to stem falling sales amid a weak consumer demand and a challenging economic environment, particularly in the North of England where most of its stores are based.

Former Asda chief executive Andy Bond stepped down as chairman at the end of January and last week it emerged that KPMG had been hired to advise it on offloading the loss-making stores in its 121-strong estate.

The retailer, which is led by former TK Maxx chief executive Paul Sweetenham had been hoping to move to monthly rents but it is understood that talks with landlords have been unsuccessful.

TPG bought the chain in 2010 for £300m with the aim of doubling the size of the business to over 200 stores.

It hired Sweetenham a year ago to spearhead a major investment programme. Republic’s co-founder and chief executive Tim Whitworth then stepped back from the day-to-day running of the business.

TPG also invested more than £7m in IT facilities to improve the chain’s online presence and hired former Mango buying director Melissa McDermott to revive its womenswear range.

But the latest accounts show sales declined by 2.3 per cent to £177m in the year to January 2012. Pre-tax profit slumped from £27.3m to £3.2m.

A source familiar with the company said Republic’s target market of 16 to 25 year olds has been particularly hit by the recession while its loss-making stores have also burdened the group.

Republic was founded by Whitworth and Carl Brewins in 1986 in Leeds as Best Company, selling denim and mens’ jeans. It was eventually renamed Republic in 1998.

Both Ernst & Young and TPG declined to comment.