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CARDSHARP CVA in the last three years have subsequently gone bust later, so perhaps they sensed they might as well force the issue now rather than wait a couple of years. As Cardsharp penned this, publishers and suppliers who are owed money by the ‘old’ Clintons have been desperately trying to find out where they stand. And as far as greeting card and gift suppliers are concerned it is rather complicated to say the least. And although Clintons’ move to much more of an own brand model, aping to some extent Card Factory, has meant that it was not as important a customer to some suppliers as it used to be, it is still very significant to many. In the last few years UKG has ‘brokered’ in third party publishers on behalf of Clintons, but that does not mean it is responsible for any outstanding invoices to other publishers supplying through the brokerage. Cardsharp remembers back to Woolworths’ spectacular collapse some nine years ago (which also happened coincidently in early December) in which UKG copped it big time, both as a supplier and the broker. It was after this, not surprisingly, UKG amended its contract terms for brokered publishers, meaning that they as broker would not be responsible in the event of a retailer failure. Cardsharp hopes that given Clintons’ payment terms, and that most of its Christmas stock would have been delivered to the broker months ago, there is a good chance that many publishers have been paid for the bulk of their stock already. He hopes so anyway! But, notes Cardsharp, that is not all. To add to the confusion, although the old (AG Retail) and the new Clintons holding company (Esquire) are owned by the Weiss family, the Weiss’ also still hold an approximate 40% share in American Greetings, along with the majority shareholder private equity company Clayton, Dubilier & Rice. And the Weiss family in turn own UKG, which Cardsharp suspects was the largest creditor when AG Retail went down. So who owes who, and who will get paid? Someone will be a loser somewhere along the line! Confused? Well Cardsharp certainly is! And it’s not helped by the fact that Clintons’ long-term chief executive, Eddie Shepherd, is
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PROGRESSIVE GREETINGS WORLDWIDE
Above: The media head-lined the Clintons’ story as saving jobs, however there will be casualties from the pre-pack deal. Below: Star of the silent movies, Harpo Marx.
about as verbally communicative with the consumer press as Harpo Marx was on film. No one from Clintons has been available to comment on any of the happenings in the media. All that went out was an official statement issued by KPMG (Clintons financial adviser) entitled ‘Future of Clintons secured following sale out of administration’. The long and short of it, as Cardsharp understands, and he stands to be corrected, the ‘new’ company will be free to walk away from the leases the ‘old’ company had, and if it wishes can close 60 or so stores, and then try and negotiate new rental arrangements with landlords on the sites that it wants to keep. Which is great for Clintons but perhaps rather galling to competitors like Cardzone and Scribbler who find themselves suddenly trading at a competitive disadvantage. The other big question for Cardsharp is whether Clintons, now financially restructured, can revive and prosper, or whether it will fall by the wayside like so many of the retailers that have undergone financial engineering in recent years. Certainly the latter is something Cardsharp hopes will not happen. In so many ways the high street needs a solvent Clintons. The higher prices that Clintons charges for greeting cards provide a benchmark for other card retailers, both independent and multiples. Without it being there, there is a danger that Card Factory becomes the new benchmark. Not only could this cause problems for indies, but it would be compounded by the big grocers seeking to move to a more low price value offering, which is the last thing the trade needs.
And also, Cardsharp noted, there was the normal misinformed rubbish emanating from so many business media ‘experts’ coming out in the wake of Clintons’ collapse. The usual drivel citing ‘electronic cards’ and online operators as well as the ‘Decline in greeting card sending’ as the contributory factors to Clintons’ demise. It was the kind of negative pre-Christmas publicity our industry could have well done without, although admittedly with the general election, the Prince Andrew story, and the oversupply of these types of retail failure stories, it did not hang around for too long in the media. And in fact, for once the industry had more than its fair share of positive stories pre-Christmas thanks in small part to the sterling work of the Greeting Card Association’s Amanda Fergusson. But on the whole Clintons affair, Cardsharp thinks it is very easy to be critical of this kind of cynical pre-pack administration where everyone except the owners take the pain, and Cardsharp thinks the bad smell is overpowering. But in all honesty, it is the law itself which is an ass in allowing this kind of manipulation and exploitation of trustworthy suppliers. The pre-pack option was put in place by government to protect jobs in struggling companies. Instead, it seems to have become an all too easy convenient ‘Get out Clause’ for any retail business in financial difficulties. And in effect it does untold damage to blameless companies down the supply line. The episode at Clintons was not the first, and will certainly not be the last of these kind of manoeuvres. But Cardsharp concludes, until this legal loophole is closed once and for all businesses will continue to exploit it as a last resort. But no prospective political party even mentioned it in six weeks of campaigning prior to the general election. So Cardsharp hopes that by the time this is read no other unfortunate ‘Events’ will have taken place.