Hairdressing and beauty have had a very difficult couple of years and have been very negatively impacted by the Covid-19 pandemic. The close contact service providers have been continually closed under government mandated lockdowns. According to a report issued by the National Hair & Beauty Federation, turnover in 2020 fell by 45% in comparison to 2019. The report also found that social distancing restrictions led to salon capacity reducing to 70% of pre-pandemic levels and businesses reporting an average loss of two hours of appointment time per stylist per day.
The report also revealed that the Covid-19 crisis has a disproportionate impact on women and those in deprived communities – for example, beauty and hair business owners are 82% female, with an 88% female workforce. There is also a higher proportion of personal care businesses than any other sector in the most deprived areas of the UK, with closure of these places posing a risk to those in the local community who are most likely to be employed at these salons.
Whilst there have been grants available and the furlough scheme as means of support, business have still struggled with capacity, supplier issues, rising stock prices, premises rent and rates, appointment no-shows, social distancing measures, repayment of loans and competition.
The assets that a hairdressers or beauty business can own are included but not limited to: stock, shop fixtures and fittings, furniture and décor, vehicles, trademarks and branding, websites and social media accounts, customer databases and goodwill.
Such instructions often come hand-in-hand with very tight timelines. There are usually rent and rate arrears that mean we have to value and sell the assets and clear the site in a matter of days and hand the property back to the Landlord. Monthly as opposed to quarterly rental periods are more common in retail than other sectors. We try and work with Landlords to try and find the best solution with all parties and have previously taken on short term rental agreements to continue occupation and give us more time to sell the assets.
Despite costing a fortune to source and supply from new, second-hand beauty shop fittings are extremely difficult to sell. This is largely down to their bespoke nature, but also due to the costs of removal, storage and re-installation. Furniture and décor is more readily saleable, to both dealers and end-users who are looking for one off pieces.
Stock, on the other hand, is usually a great asset in terms of saleability. It does of course depend on what it is, how old it is, what condition it is in and how much there is of it. It’s not something we struggle to find buyers for, and we have achieved as much as 60-70% of cost price! Limiting factors on value are the costs of removal and storage, potential inaccuracy of stock lists and the fact that it is sold without warranty or guarantee, without any rights of return.
We expect hair and beauty to be extremely prevalent in the insolvency statistics for 2022 and are geared up to handle the ever-expected wave. We can handle the case from start to finish, from initial site visit and inventory, through the valuation and disposal, to site clearance and handing back the site to the Landlord in a time and cost effective manner. We can also carry out desktop valuations of stock and assets and provide marketing advice and valuations on retail properties.
If we can be of assistance to you or any of your clients, please do not hesitate to get in touch on 01425 200366 or op@proudleassociates.com