Mr Davies and his partner in the business, Andrew Mossman, met shareholders yesterday and agreed to a creditors' voluntary liquidation of the George Davies Corporation, the company that controls Xtend.
The collapse does not affect his other high profile business venture, the George Davies Partnership, which supplies the George brand of clothing to Asda supermarkets and in which Asda has a 25 per cent stake.
Theodoulos Papanicola, a partner in the North London accountancy firm of Theo Paris & Co, was appointed liquidator to George Davies Corporation yesterday. He told the Independent that he would be trying to sell the home shopping business as a going concern. A creditors' meeting is to be held within two weeks.
Mr Davies, 51, has been fighting for the past few weeks to save the business, launched in a blaze of glory in March last year. It is was reported at the time of launch that pounds 10m was invested in the business, a substantial proportion of which is believed to be Mr Davies's own money.
Mr Davies founded Xtend - a name reminiscent of the Department X store he opened while chief executive of Next - after masterminding Next's move into home shopping in the late 1980s. Despite the success of the Next Directory, the costs of setting up the distribution business and other problems brought by Next's rapid expansion led to Mr Davies's sacking from the board in late 1988, though he was able to secure a reported pounds 2.5m pay-off.
The Xtend business started with a revolutionary new concept, which Mr Davies called the 'megalogue'. It was a cross between a catalogue and a magazine and was supposed to be published monthly and be sold for 30p in branches of the book retailer Dillons or given away as a promotion with a tabloid newspaper.
Mr Davies said he wanted to give it a 'man-in-the-street' air and used models including famous faces such as the Liverpool goalkeeper Bruce Grobbelaar.
The prices of the clothes ranged from a pounds 5 pair of briefs to a pounds 100 suede jacket, but were always cheap in relation to the high street.
However, fashion pundits criticised the concept as going downmarket when the rest of the industry was moving up - prompted, ironically, by the Next Directory.
Close watchers have recently detected a move upmarket, though that sector has become more crowded with the success of a rival home shopping business, Racing Green, founded by David Krantz, the man behind the menswear chain Blazer.Reuse content