Cath Kidston seeks new lease of life online

For 27 years, Cath Kidston’s timeless floral designs shrugged off recessions, the financial crisis and the uncertainties of Brexit.

But the company finally met its match in Covid - collapsing a month into lockdown after its owner failed to find a buyer.

However, boss Melinda Paraie is convinced this will not be the end for the much loved label.

Freed from the demands of running any physical shops, she is now eyeing a hopefully prosperous future for the brand online.

“We’re in a much better place now then when I started with the company,” Paraie says.

Cath Kidston’s Hong Kong-based parent company, Baring Private Equity Asia, shut all 60 stores in the UK in April as footfall fell off a cliff.

The brand has continued to sell online and via its wholesale and franchise businesses worldwide after a rescue deal known as a “pre-pack”. E-commerce now accounts for 85pc of sales.

Paraie says that Baring has ploughed cash into its website.

“We have an extremely loyal customer base of Cath fans, but also about 40pc of our [online] visitors are new to the brand. So, you know, it definitely has relevance today,” she adds.

“There is such an authenticity to British inspired hand drawn prints. And that has really been the success right from the very beginning. Our goal is to continue to bring that into relevant products that really speak for themselves today.”

The company’s Piccadilly store is reopening in November as its global flagship and only physical branch. Some of the new wares will have a more sophisticated feel and the focus will be on gifting and homeware.

Paraie says the wheels were already in motion to rely less on stores and sell more online, but the pandemic accelerated that shift as online sales boomed across the retail industry.

“The drop in footfall had put enormous pressure on our brick and mortar business,” she says.

Being involved in a restructuring was no easy task, admits Paraie, who has been at the helm for two years after holding senior positions for retailers John Hardy, the New York-based jewellery company, and Coach, the luxury brand.

“It was the best possible outcome,” she says.

“It was a very difficult time for the history of Cath Kidston and we so regret all of the anxiety and disruption it offered to our customers, but also to our employees, many who have been with us for years. We really had to move to something that was much more nimble and flexible, and with a much, much smaller cost base.”

The brand found itself in hot water over back pay when it went bust after more than 900 workers were made redundant less than a week before wages were due. This was followed by a swift pledge not to leave staff in the cold, and Paraie insists employees received the money they were owed.

“The issue came from the quick timing of the pre-pack and the ability to really execute. Our intention was always to pay,” she says.

The company was founded in 1993 by Cath Kidston, who started her eponymous business selling embroidered tea towels from her flat in London. She struck a deal with the private equity firm TA Associates in 2010 and four years later resigned as creative director.

Baring Private Equity Asia took control of the business four years after that, enticed by its overseas arm. At the time, it had sales of £118m and pre-tax profits of £11m. But higher costs and fewer shoppers visiting its stores led to losses of £28.8m over a 21-month period, administrators at Alvarez & Marsal said.

Prairie says Kidston is “a friend” of the brand and her input has been “very valuable” especially post-administration.

“Our goal is to make her proud,” she says.

Its private equity owners have been supportive of the move to digital as footfall still lingers below pre-Covid norms.

Marty Wikstrom, retail veteran and chairman of Cath Kidston, adds: “We’re optimistic about what the future holds for Cath Kidston. This is a brand with a powerful heritage and loyal customer following that has pivoted its business strategy.”

The switch mirrors similar decisions from a clutch of other struggling brands such as shirt seller TM Lewis and baby and toy chain Mothercare, both of which have ditched stores in the past few months as customers shun bricks and mortar shops to go online instead.

Before them BHS - once owned by Sir Philip Green - launched online after going bust in 2016, with Qatar-based firm Al Mana snapping up its website and international arm. However, Al Mana announced it was shutting down two years later. The Woolworths brand was also resurrected online for several years after the company collapsed in 2008.

The timing may be in Cath Kidston’s favour as more customers shop online, work from home and are able to accept deliveries.

The boom in online sales since lockdown also suggests the shift to home delivery is permanent. But ultimately, customers will decide if the brand is owed a living in the current market, more fragmented than ever.