Online homewares retailer Cox + Cox experienced a decline in demand and increased costs in the build up to its administration.
Ian Defty and Bai Cham, both of Begbies Traynor, were appointed as joint administrators on 27 February 2023.
Detailed in newly filed documents on Companies House, the business, which saw sales surge during the Covid pandemic to c£27m from £16m for the year ending January 2021 and again rising to c£38m in the following year, said since restrictions were lifted, demand fell and sales began to decline.
Couple with rising shipping costs and the late delivery of Christmas stock, sales decreased 33% to £27.5m and resulted in a £3m loss in the last year. The company implemented a number of measures to cut or maintain costs – including a redundancy programme – although this did not mitigate the declining performance. Furthermore, the cost-of-living crisis and high raw material prices, rising inflation and low consumer confidence were all impacting factors.
Cox + Cox secured two loans of £1.5m and £250,000 from Hilco Capital and YouLend respectively, which were repaid during November 2022. However, cashflow indicated that additional funding would be required in February this year. The company approached a third-party investor, who expressed an interest in the business and a potential management-buyout style administration, but after completing due diligence, the offer was withdrawn.
Following unsuccessful attempts to secure funding, the business approached Begbies Traynor for advice and to begin a pre-pack administration sale process. Subsequently, Landwood Commercial was instructed to market the business for sale.
The marketing process resulted in a total of 64 enquiries from interested parties with Landwood receiving 14 signed non-disclosure agreements. Five offers were then tabled from unconnected parties, with two bidders offering to purchase the business and certain assets, while one related to the IP and stock, with the final offer for the IP only.
Following negotiations, Giomani Designs Limited raised its offer to £750,000 on a cash basis to keep the company as a going concern, which was accepted. This price was then decreased to £613,072 due to Giomani Designs meeting employee liabilities of £118,387 and satisfying a payment of £18,540 to storage company Arrow XL. This was accepted by the administrators with payment received in full and included the transfer of 65 jobs under TUPE.
Upon entering administration, Cox + Cox owed the HMRC around £1.6m with administrators stating the secondary preferential creditors are likely to receive some dividend, although this is uncertain. As for unsecured creditors, total claims valued £2.6m and it is not expected any funds will be made available for a distribution. It is anticipated that creditors will suffer a total shortfall of around £4.7m.
A statement from the administrators said: “Upon appointment, the joint administrators successfully completed the sale of the business and certain assets via a pre-pack administration to Giomani Designs Ltd, a furniture and home furnishings manufacturer based in Birmingham. Together, the joint administrators were able to secure the transfer of 65 jobs via the sale.”
