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La Senza in administration for the second time

The UK High street chain best known for selling lacy lingerie, and previously owned by former dragon Theo Paphitis, has been placed into administration for the second time in three years. It is thought up to 750 jobs could be at risk if a buyer of the business as a going concern is not found.

Theo Paphitis bought the chain in 1998 and sold it in 2006 to a private equity firm, reportedly for £100,000,000.

The company that was backed by private equity that owned the La Senza business was placed into administration in 2011 and a slimmed down version of the high street business was bought from the administrators by international retail business, M & H Alshaya Co, a world wide retail franchise business that owns over 70 brands and employs over 40,000 people worldwide.

The new owners despite their vast resources and expertise have failed to turnaround the lingerie chain and administrators were appointed to the business for a second time on 1st July 2014. At the time of the administrators appointment, the chain operated from 55 high street stores across the country. The administrators  will no doubt look to find a buyer for some or all of the business, while the company continues to trade in administration.

On his appointment joint administrator, Robert Moran, commented, “Like many other retailers, La Senza has been hit hard by the difficult economic environment and a slowdown in consumer spending. There are no immediate plans to close any stores and the administrators shall continue to assess the trading strategy over the coming days and weeks." It has since been reported that 18 stores are to close, although Theo Paphitis who owns competing brand Boux Avenue is said to be interested in acquiring some of the remaining La Senza stores, thereby expanding his existing business and preserving some employment for some of the La Senza employees .

The demise of the high street has been well publicised over the last few years with numerous well known brands, including in the last few months Blockbuster and Internacionale, falling into administration. The reason is often quoted is the fall in consumer spending, since the financial crash in 2008, and whilst this is no doubt a factor, over geared borrowing, high street and shopping center level, typically, upward only rents and rates and the increasing impact of internet shopping must also be a major factor. The retail landscape is being described as a ‘doughnut’, with all the surviving major stores forming a ring around the high street ‘hole’ in the center.

A spokesperson for Alshaya, said, “We will work closely with the administrators as they explore their options for the business and if they choose to close all or part of the business, every effort will be made to support staff in finding alternative opportunities for employment.”

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