Finance

How hip department store Hutspot ended up on the rocks after a restart

At the Hutspot branch in Amsterdam’s Van Woustraat, there is no sign of the announcement that the two remaining stores of the once fast-growing chain will also be closing their doors soon.

Admittedly, the shop is not very busy at the end of Monday afternoon. A group of Asian tourists and a few couples walk along the tasteful racks with clothing, vintage furniture, home decor, kitchen items, jewelry and art.

Tasteful propositions

But there are no screaming signs with ‘closure sale’ and half-empty shelves. In fact, behind the cash register there is even a sign with a vacancy for a sales talent. That sign can go away, because this store and the Eindhoven branch will also close within six weeks.

Assistant store manager Jona, who is behind the till, regrets the closure. “I’ve been working here for three years, but have known Hutspot from the start because one of the founders is a family friend.”

Sin

He thinks the store reopened too soon after the February restart. “Perhaps after the bankruptcy, more thought should have been given to adapting the concept, for example a return to more sustainability.”

The assistant store manager understands that options are currently being explored to continue some of the concept. “I hope so, because it would be a shame if that disappeared.” His female colleague behind the cash register nods in agreement.

Promising start

The concept was conceived nine years ago by three young entrepreneurs; Nick van Aalst, Pieter Jongens and Reinier Bernaert. With an investment of 5000 euros each, they open a so-called ‘pop-up’ store under the name Hutspot in the Utrechtsestraat in Amsterdam.

In the temporary store, creative entrepreneurs and designers, artists and start-up brands who are not yet able to get a foot in the door with the large retail chains can sell their stuff. The founders select suppliers who offer something original and special.

The store concept caught on, and not much later the three opened a permanent store on Van Woustraat in the popular Amsterdam district of De Pijp. Initially, the mini department store even houses a barber and lunchroom.

Award-winning concept

The reactions in the press and on social media are once again positive, and in early 2014 Hutspot will open a second store on the Rozengracht in Amsterdam. The company also won the Best Start Up Award that year, beating, among others, meal delivery company Hello Fresh.

After that, Hutspot will also expand to other major cities in the Netherlands, with stores in Utrecht (2015), Rotterdam (2016) and Eindhoven (2017).

Glory Year

The absolute top year is 2019, in which the entrepreneurs open no fewer than three new stores. The mini department store is located in Den Bosch and Breda. And in the Amsterdam luxury shopping center Magna Plaza, a store of 700 square meters will be opened with a ‘clever mix of avant-garde fashion, innovative design and local art’.

The founders are far from satisfied with this. That summer, Hutspot announced that it would soon open its first foreign store, in Antwerp. After that, other foreign cities are on the agenda.

Financing

In the growth spurt, the three founders cannot live on the deep pockets of wealthy investors. In 2016 they look for lenders to finance the growth of the retail chain, but initially talks with entrepreneurs such as Roland Kahn fail.

Ultimately, Hutspot finances the growth from current income and with a modest investment from a small investor, says financial man Reinier Bernaert.

What also helps is that Hutspot does not have to buy the stocks. Most of the stuff sold in the stores comes from suppliers. They pay the company an amount for the use of the store and contribute part of their turnover.

Start-up losses

The rapid growth nevertheless leads to start-up losses. Hutspot always presents itself in the media as a thriving retail company, but in retrospect that is disappointing, at least for the past few years.

Financial reports show that Hutspot achieved a turnover of 4.4 million euros in 2018. The loss is about 100,000 euros. In 2019, the turnover will increase to 5.3 million euros. The loss doubles, to 217,000 euros.

Corona

The corona year 2020 means the death blow for Hutspot. The stores have to close for an important part of the year, and the lost turnover cannot be compensated with the online store that has only just started.

However, the retail chain makes grateful use of government support. The UWV registers show that eight Hutspot companies will receive 580,000 euros in wage support in 2020 alone.

No fat on bones

The entrepreneurs also negotiate temporary rent reductions with the owners of the retail properties, but that does not yield enough. The turnover of the Hutspot companies will fall to 4 million euros in 2020. At the bottom of the line is a mega loss of 1.5 million euros, seven times more than the year before.

Partly due to the mega investments in 2019 in the new stores and a new automation system, Hutspot did not have enough fat on its bones to get through the corona year, says financial man Bernaert. “In 2019 we dug deep into our pockets to go ‘all in’. That’s why 2020 was all the more a bitter pill for us.”

Bankruptcy

Around Christmas, the three entrepreneurs decide to file for bankruptcy. That will be announced at the end of December last year. The generous government support that has ensured that hardly any companies went bankrupt, despite the corona crisis, has not been able to save Hutspot.

That is not only bad news for the three owners and the 80 employees of Hutspot, but also for the nearly 400 suppliers of the store chain.

Many starting designers, companies and artists are in danger of losing an important sales channel as a result of the bankruptcy. Many of them also still have money to pay, and they still have their stuff in the Hutspot stores. Retrieving them is a time-consuming, expensive and unsatisfactory exercise.

Restart

During the settlement of the bankruptcy, bankruptcy trustee Peter Bos finds that the company has a debt of more than 1.5 million euros with the UWV and the tax authorities. In addition, more than a thousand ‘ordinary’ creditors are owed about 1.6 million euros from Hutspot.

But the curator will also come with good news in February. Hutspot can make a partial restart, under the wings of the owner of the successful retail chain Dille & Kamille.

Dille & Kamille (36 branches, turnover over 50 million euros) did get through the corona crisis well. Owner Hans Geels sees opportunities for the Hutspot stores in Amsterdam’s Van Woustraat and Eindhoven and the webshop.

Geels will pay the curator 170,000 euros for the promising parts. “We are going to combine our knowledge and that of Hutspot, and make Hutspot a financially healthy company again,” the entrepreneur said enthusiastically in Het Parool at the beginning of this year.

Blessing for suppliers

As soon as there is a healthy basis again, Hutspot could also open new stores. “The intention is that eventually there will be five to six Hutspots”, says Geels.

The restart is also a blessing for Hutspot’s suppliers. Curator Bos agrees with the new owner that relations with 80 percent of the suppliers will be continued.

New issues

In practice, however, it turns out to be more unruly. In April, the bankruptcy trustee Bos already noted in his first bankruptcy report that a number of Hutspot’s suppliers were dissatisfied with the way in which Geels deals with them.

After being called to account by curator Bos, the restarter promises to get better. But in the second report from August, Bos writes that the problems have not yet been solved.

Restart failed

The problems with the suppliers are proving to be the harbinger of more bad news. At the end of last week, Hutspot reported that the two remaining stores and the webshop will also close before the end of the year.

Entrepreneur Geels is unreachable for comment due to vacation. His spokesman Noud Bex blames the failure on an ill-considered restart. “Instead of quickly reopening the stores at the beginning of this year, we should have gone back to the drawing board first to determine where the customers’ needs lie.”

Not viable

According to Bex, Hutspot therefore remained too much of a clothing store, and was unable to make the intended shift to lifestyle. “It also turned out that there were hardly any online opportunities, because the previous owners had hardly invested in them. We quickly found ourselves in a loss-making situation, and we now have to close. Well, they are beautiful stores, but they must be viable.”

The spokesperson does not want to say how much loss Hutspot made last year. “We keep that internal.”

Messy Administration

The problems with the suppliers are downplayed by Bex. “There was some dissatisfaction with a few suppliers, but we largely resolved that during the year.”

The spokesman attributes the problems to the acquired administration, which would have been a mess. “It turned out to be not quite in order, to say the least.”

Suppliers still screwed

Curator Bos, however, denies that the problems with the suppliers have been resolved. “At the restart, I concluded an agreement in which the interests of the suppliers were also served. This quickly became a hassle, and there is still no final solution for that situation.”

The trustee also doubts whether these problems will be solved now that the remaining stores are closing. “I had to hear from the press on Friday that Dille & Kamille will be closing the shops. I have now read that the agreements made about the suppliers will be complied with, but it is unclear to me how they see that.”

Appropriate agreements

According to the spokesperson for Hutspot, ‘appropriate agreements’ are currently being discussed with suppliers and creditors. “We want to settle things in a neat manner,” said Bex.

“Suppliers can retrieve their belongings or participate in the liquidation sale. We want to discuss the amounts that we still owe in order to find a solution. I cannot say yet whether they will be refunded. But it is premature to say it isn’t.”

False

The duped suppliers are not the only ones who feel dissatisfied with Hutspot’s failed restart. Co-founder Reinier Bernaert says he is ‘annoyed’ by the way in which Dille & Kamille explains the failure of the restart, by pointing out the inadequate administration and web shop.

“The people behind Dille & Kamille are now trying to pass the ball on to the founders. That is not fair and also a bit false. After all, they are the ones who have restarted with the best parts of Hutspot, and did not succeed in doing so themselves. success. They seem to have choked on the project,” says Bernaert.

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