Beginnings and name change
Originally incorporated as Model Aircraft (Bournemouth) Ltd on 8 November 1937, the company started with one store in Brighton in the 1930s.[2][5] When this was sold after about 40 years under the same ownership, the store was bought in order to be "a showroom for the importers of many prestige model ranges".[5] Following success at this store, the new owners then began to purchase other shops, in Crawley, Eastbourne, Guildford and Maidstone, and brand them as Model Aerodrome.[2][5] During the mid-90s a computerised stock control system was implemented, and in 1995 and 1996 respectively, the company opened stores in Croydon and Plymouth.[5]
In March 1999, after the opening of their eighth branch in Bluewater, Kent, the company expanded its range to include Scalextric and Corgi products, and with this expansion of their product line, changed their name to Modelzone.[2][5] Then they eventually acquired a number of stores formerly owned by the Beatties chain of model shops (which had closed when its parent company, ERA Group, placed it into administration).[6][7]
Investor buyout and expansion
In July 2009, ModelZone's new investors sought to "defy the credit crunch" through a buyout led by CEO David Mordecai and non-executive chairman Terry Norris.[8] The buyout was the subject of a prolonged negotiation with private equity investor Lloyds Development Capital, who were initially sceptical of Modelzone's long-term growth forecast. Indeed, as LDC Investment Manager Miles Frost commented in 2010, "The credit crunch hit in 2008 and backing a retailer was a scary prospect for an investor, especially when Modelzone's sales were declining."[9]
Despite LDC's initial scepticism, a strong Christmas performance and internal reforms towards the end of 2008 led LDC to reappraise ModelZone's growth prospects and agree an MBO in July 2009. This agreement saw LDC invest £5.6 million supported by a further £3.6 million of funding over three years.[9] With the MBO complete, in 2010 the ModelZone board began an expansion plan which saw 15 stores open between 2010 and 2012, including in Scotland and in Wales.
By the end of 2012 the company had grown to 47 stores, but this "disastrous" expansion would prove to be too much for the company as it entered into administration at the end of the second quarter of 2013.[10]
Administration and store closures
The company announced on 26 June 2013 that it had gone into administration. The announcement was made on Modelzone's website, minutes after informing staff, and with the rest of the e-commerce site having been abandoned. Many staff on leave and planned rest days learned of the administration through the website closure and social media:
"On 26 June 2013, Richard Michael Hawes, Nicholas Guy Edwards and Robert James Harding of Deloitte LLP were appointed Joint Administrators of Modelzone Holdings Limited, The Amerang Group Limited, Modelzone Limited and Amerang Limited (together the 'Companies'). The affairs, business and property of the Companies are being managed by the Joint Administrators. The Joint Administrators act as agents of the Companies only and contract without personal liability. The Joint Administrators are authorised by the Institute of Chartered Accountants in England and Wales (ICAEW). All licensed Insolvency Practitioners of Deloitte LLP are licensed in the UK" The administration was announced just hours after retailers were due to pay rent for the next three months on 24 June, the quarterly rent day, and after ensuring the monthly staff salary pay day run on the 25th of each month, and securing capital return to investors with Deloitte.[15] Alongside the notice on the company's website, notices were placed on the company's e-commerce website refusing all online trade (including Amazon and eBay accounts). Gift vouchers were still being accepted, but at 50% of their face value.[16]
Administrators Deloitte
End of trading
Administrators confirmed on 28 August 2013 that "they had received no offers for the business on a going concern basis", and would be closing the last 18 stores by mid-September 2013, with the loss of the remaining 126 jobs.[1][30]
Joint administrator Richard Hawes stated:
"We sought to find a potential buyer for some or all of the stores, but unfortunately no viable offers have come in since our appointment two months ago. Modelzone has been generating losses over the past few years, largely through an increase in online competition and having taken leases on new stores that proved to be unprofitable.
Once again, we would like to thank the company’s employees for their support and professionalism during this time."
Relaunch of brand
In October 2013, WHSmith, a British retailer known for its high street stores selling books, stationery, magazines, newspapers and entertainment products, announced that it had bought the ModelZone brand, selling products under this brand through existing WHSmith stores, a format employed by the company with some of its other brands.[31][32][33][34] WHSmith announced through the ModelZone Twitter page in November 2013 that 10 stores were to carry products under the ModelZone brand name by 23 November 2013.[35] This was later accompanied by usage of the Modelzone brand on WHSmith's website to sell Airfix, Hornby, Corgi, and Scalextric products.[3]
