This is Gordon Brothers: ‘vulture financier’ and savior of Blokker | RTL News

At the beginning of February it was announced that Blokker was in the dark. The chain with 400 household stores and 4,000 employees urgently needed money to order new stock. Without that money, the survival of the 128-year-old retail company was at risk.

On Saturday, Blokker announced that it had concluded a three-year financing agreement, which should enable the company to become healthy again. “We can make our plans and continue to implement the growth that has been achieved,” said Blokker director Pauline Boerman.

Gordon Brothers

The lender is the American Gordon Brothers, a specialist in restructuring and liquidations of companies. The American company is known in the Netherlands for, among other things, the empty sale of the V&D and Hudson’s Bay department stores, after their bankruptcies in 2015 and 2019.

Gordon Brothers likes to present itself as the savior of ailing companies. For example, director Nick Taylor explains in a video on YouTube how the Laura Ashley company revived after the bankruptcy of the interior design store in 2020.

Low costs

Gordon Brothers bought the brand, intellectual property and designs from the bankrupt estate and licensed them to other companies. Without expensive stores, staff or high production costs, Laura Ashley started making a profit again.

This trick was also used at other companies in which Gordon Brothers was involved, such as the fashion brands Bench, Ben Sherman and Wet Seal and the photo brand Polaroid.

Not without controversy

Yet Gordon Brothers is not without controversy. Not everyone sees the company as a lifesaver. This is because the involvement of Americans is often accompanied by the closure of shops, offices and factories and the loss of employment, while the service provider itself makes a good profit from this.

For example, Gordon Brothers’ involvement in the collapse of the Irish department store Clery’s led to much public outrage. Gordon Brothers acquired the ailing company in 2012, split off the valuable real estate, after which the retail company had to close its doors in 2015.

Vulture financier

A parliamentary inquiry into the demise of British Home Stores (BHS) in 2016 also commented on the role of Gordon Brothers. In the run-up to the bankruptcy, the company had given the British department store chain a loan, on which a very high interest rate had to be paid. Moreover, that loan allowed Gordon Brothers to acquire BHS at any time.

Because of such practices, Gordon Brothers is sometimes described in the English-speaking press as a ‘vulture’, or vulture financier.

Hudson’s Bay

Even in the Netherlands, not everyone was always positive about Gordon Brothers. On its own website, the American company reports that it successfully sold 70 million euros worth of inventory from the bankrupt department store chain Hudson’s Bay and that the customer was ‘very satisfied’ with the financial result.

But according to the bankruptcy reports, ‘only’ 24 million euros were sold during the liquidation sale. In addition, Gordon Brothers submitted a hefty bill for 6.7 million euros, which should be paid in priority over other creditors.

The trustees who had to settle the bankruptcy of Hudson’s Bay were reluctant. They thought the bill was too high and the priority was unjustified. Ultimately, they largely backed down and Gordon Brothers received a priority payment of 5.8 million euros.

Blokker loan

Not many details are known about the loan that Gordon Brothers provided to Blokker. When asked, CEO Ynse Stapert of Blokker parent Mirage Retail Group does not want to say much about the maximum size of the credit and interest.

He stops short of saying that the size of the loan ‘moves along with Blokker’s stocks’ and that the interest rate is ‘in line with the market for such specialist and tailor-made financing’. The other credit conditions would also be the same as comparable loans.

He does confirm that Blokker had to pledge his stocks. If the store does not meet the conditions, Gordon Brothers will only have access to those stocks. “In that situation she will not get control of the company,” said Stapert.

Profitability

Now that the financing has been completed, Blokker can continue working on achieving profitability. “Blokker will continue to keep a close eye on costs, but will continue to build on its two important assets: its own brand and the store network,” the CEO said.

“Because Blokker has been a trusted brand for the household for almost 130 years, we have been able to put a strong own brand on the market. We not only sell this range through our own channels, but also have a lot of potential in other channels, both domestically and For example, we are very successful with the Blokker brand on Bol.com in Belgium.”

Not a Laura Ashley model

That approach seems to fit well with the previously described ‘store brand without high costs’ model that Gordon Brothers used at Laura Ashley and some fashion brands. But according to Stapert, that is certainly not the model that will be adopted by Blokker, because he also attaches great value to the household chain’s stores.

“With the Blokker store network of 400 stores, we are close to the consumer. We can deliver online orders quickly, sustainably and efficiently or have them collected by the consumer. Returns are also largely done through our stores.”

According to the CEO, Blokker is also interesting for other parties. “For example, we are already a collection point for Ochama and DHL and we work together with Thuisbezorgd.nl. But there is much more interest from both online retailers and logistics parties.”