Kelso’s Nicole Farhi goes into administration

The luxury fashion brand is the third UK private equity-backed retailer to collapse in recent weeks.

Nicole Farhi, a fashion retailer owned by distressed specialist Kelso Place Asset Management, has gone into administration. 

The company has hired advisory firm Zolfo Cooper to lead the restructuration, and is likely to look for new owners in the coming weeks. Discussions with interested parties have already started, according to Zolfo Cooper. 

The high-end clothing brand, established in 1982 by designer Nicole Farhi and ex-French Connection boss Stephen Marks, counts 114 staff and operates 15 stores and concessions. 

It has had two different private equity owners in the past two years: transatlantic firm OpenGate Capital bought the business in 2010, before selling it to UK-based Kelso in 2012. Kelso was deemed a suitable buyer thanks to its previous acquisitions in the luxury sector, which have included Smythson and Anya Hindmarch, two UK handbags and accessories upmarket brands. 

But market dynamics made it difficult for the firm to revive the business this time round, said Peter Saville, a partner at Zolfo Cooper, in a statement. “Nicole Farhi is a very powerful retail brand. Unfortunately, as with many other fashion retailers, the decline in high street spend coupled with rising costs has led to increased financial pressures on the business.”

The demise of Nicole Farhi comes at a time when macroeconomic trends and the shift to online shopping continue to put pressure on traditional retail operators, causing grief among a number of private equity-backed companies. 

It is the third such business to file for administration in recent weeks, following the collapse of furniture chain Dwell, formerly owned by  London-based Key Capital Partners, and toy shop ModelZone, backed by Lloyds’ buyout arm LDC.  Fashion chain Internacionale Retail and Ark Clothing are amongst other retail businesses which have also foundered over the last two weeks. 

Trading at Nicole Farhi is set to continue during the administration process, Zolfo Cooper said. Kelso declined to comment.