The assets of discounted furniture retailer Trade Secret have been sold for a sum of £100,000 after the business collapsed into administration.
William Batty and Hugh Jesseman, both of Antony Batty & Company LLP, were appointed as joint administrators of furniture outlet retailer Full House (Interiors) Limited, trading as Trade Secret, on 29 June 2023.
In the events leading to its administration, the business, which purchased furniture order cancellations and returns from the likes of John Lewis, Marks and Spencer’s, Furniture Village and Loaf to then sell at reduced prices, suffered from dwindling turnover, impacted by Brexit and then the Covid pandemic.
Back in 2019, sales fell by 19% as Brexit uncertainty played a role, while the following year turnover reduced again due to the pandemic, although it online channel enabled a recovery to maintain levels of trading. However, profit margins dropped due to delivery and supply issues.
Other cost increases, coupled with a reduction in consumer demand, also impacted profitability. As a reaction, the company cut overheads including staff costs, but saw turnover during 2022 decline 12%, which resulted in a loss for the year.
At the beginning of 2023, the business was further impacted by the shortage of supply of branded clearance product as well as increasing pressure from core suppliers over terms and price structure. Turnover for the first two quarters of 2023 stood at £835,000 and were down 37.8% on the prior year, while losses amounted to £273,000.
Furthermore, its May sale, which traditionally helped boost turnover, delivered a poor result, only achieving circa 50% of a historical May sale, which came as a severe blow. After a review of its options, the business was placed into administration.
Upon appointment, administrators granted a license to connected company White Chameleon Interiors Limited to trade a clearance sale of the business, which lasted until 19 July 2023 when operations were ceased. During this period, the company was marketed for sale and received 17 responses from interested parties, 14 of which returned non-disclosure agreements.
This then led to two formal offers for the business, with both parties tabling around £50,000. Following negotiations with one unconnected party, Home Outlet Direct Limited, the offer was revised to £100,000 plus VAT and was received on 14 July 2023.
The Home Outlet Store Group trades from three large furniture outlet stores based in Rushden, Market Harborough and Burwell as well as online.
Further negotiations were required with the sale being completed on 2 August 2023. The sale totalled £120,000 and included £25,000 for motor vehicles, almost £59,000 for stock and £3 for the IP and trading name ‘Trade Secret’.
Preferential creditors, made up for employee arrears, totalled £13,800, while secondary preferential claims from the HMRC stood at £145,000. Administrators said that it expects ordinary preferential creditors (employees) to be repaid in full, while secondary preferential claims should receive a small dividend but are likely to suffer a shortfall of £19,000.
As for unsecured creditors, these are estimated to be owed over £1m, with claims received to date of the report standing at around £480,000. A further £127,000 is owed to employees, while £262,000 is owed to various loans and £126,000 is owed via an intercompany loan. It is expected that creditors will suffer a total shortfall of just over £1m.
