Baugur’s sale of MK One to Hilco is an unusual move for the Icelandic investor. It hasn’t been in the habit of selling its UK retail investments, but then again it hasn’t had many headaches on the scale of MK One.

With its reputation for tricky restructuring jobs, Hilco is an obvious buyer, although the transaction won’t reassure suppliers or staff that the business has a long-term future. It certainly doesn’t in its existing form and if former MK One boss Elaine Gray really is trying to put it together with Ethel Austin, she is a brave woman indeed.

For Baugur, the sale is likely to mean it has to take a nasty financial hit. But it is at least avoiding the ignominy of putting one of its business into administration, which would doubtless stir further rumours about its financial state.

To be fair, everyone has known that MK One has been on the brink and haemorrhaging sales for a long time. The stores have looked awful and in a permanent discounting frenzy, and the fact that it has been run by someone who made his name running supermarkets in Ireland hasn’t helped in a fashion business where experience of tough times is everything.

The lesson of MK One and other businesses like Ethel Austin are that being dirt cheap is not enough in the value end of the fashion market. Primark has raised the stakes and now the product doesn’t just have to be cheap; it has to look good, be on trend and be sold in an appealing store environment too. If, like MK One, a business doesn’t have the scale of the big players it’s going to be in trouble.

So is this deal, combined with Ethel Austin’s administration last week, a sign of fashion being in meltdown? It’s a tempting assumption to make and certainly the market is in a very bad place right now.

But what’s really happening is that the downturn is finishing off businesses that, in good times or bad, had had their day. It may be harsh, but that’s business.

Hard times for Rose

Sir Stuart Rose must be wondering how it came to all this. From the man who could do no wrong a year ago, he seems permanently entangled in corporate governance disputes and yesterday had to extricate himself from a bizarre row over karaoke bars, of all things.

Rose’s climbdowns over the past few weeks have been embarrassing, but he seems to have calmed the storm among shareholders with the concessions he has made. With the distractions out of the way, he’ll really have to get his head down. Having set himself up as the only man who can steer M&S through these troubled times, he has to deliver.

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