Troubled fashion chain D2 likely to be split up

DOUBTS are growing over whether a buyer can be found for Scottish fashion chain D2 as retail analysts warn that potential bidders are likely to cherry pick individual stores.

Experts are unconvinced that the Ayrshire business can survive as a going concern after restructuring specialists seized control earlier this week.

Administrators at BDO have so far closed just two of D2's 79 stores amid hopes that a buyer will come in to take over the whole business.

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However, retail analysts warn that there are currently few buyers in the market interested in taking over entire retail chains.

Robert Clark of the Retail Knowledge Bank said: "I doubt there will be any takers. There will likely be takers for individual stores and the administrators will probably be left with a large chunk of the business.

"D2 had a history of problems even before the recession and if you look at all of the ones that have gone down, like (bookseller] Borders, they have all got histories."

More than 60 jobs have already been lost at the chain, including 22 at its headquarters in Dundonald. Most of the shops have remained open over the new year but if a buyer is not found, it is thought that as many as 1,000 jobs may go.

D2, which was created through the merger of Sir Tom Hunter's Fosters Menswear business and Jeans for Sale, the denim chain founded by Scots businessmen Alan Kinney and Jim McGonigle, began to experience problems prior to the recession.

It made its first pre-tax loss during the year to 31 January 2007 and the last available accounts show that this deficit had widened to 2.6m by 31 January 2008.

Hunter sold his stake in the company in January 2008.

Administrators at BDO said it was still "too early" to say whether a buyer will be found.

Insolvency experts are predicting that several more high profile retailers will follow D2's fate in the coming year.

Insolvency association R3 expects 23 household names will go to the wall in 2010 – one more than in 2009.