720 jobs under threat at Habitat

The future of up to 30 stores and 720 jobs was put at risk today after the UK side of retail brand Habitat went into administration.

Zolfo Cooper, the firm appointed as administrator, said it would assess all possible options for the group and keep the stores open while it tries to find buyers.

The UK collapse brings the group almost full circle back to where it started when design guru Sir Terence Conran opened the first Habitat store in the Fulham Road in 1964.

In future, the Habitat fascia will hang just on three London branches - in Tottenham Court Road, King's Road and Finchley Road - which will largely serve as showrooms to help develop an online business.

These shops are now owned by Homebase and Argos owner Home Retail Group, which bought the rights to the Habitat brand in the UK, the website and the three stores in central London for £24.5 million in a deal struck almost immediately after it went into administration.

But the story may not end there for the Habitat name, or certainly not outside the UK. While the UK arm had suffered severe cashflow problems in recent weeks, brought on by the current tough environment for retailers, it is a rosier picture in Europe.

Habitat's owner, corporate restructuring specialist Hilco, said talks are under way to sell the profitable European operation, which consists of 27 stores in France, six in Spain and five in Germany, to "a major European listed business".

The rights to the Habitat brand name outside the UK is likely to be sold with the business, with the prospect that the brand could yet become global while disappearing in its home country.

Terry Duddy, Home Retail's chief executive, will try to stop that happening. As well as safeguarding the jobs of 150 of Habitat UK's 870 employees, he wants to revive the brand online and through concessions in Homebase stores.

Habitat came to epitomise London's young and trendy image during the Sixties with a range of pastel colours and products based on Conran designs.

Mr Duddy denied it would be a problem putting such a famous style-led brand alongside a DIY business, adding that research had shown there was a strong overlap between buyers of Homebase and Habitat products.

Hilco acquired the group in 2009 from the Ikano Group, the company founded by the Kamprad family, which owns Ikea.

It paid almost nothing for the chain, which was carrying heavy debts, while Ikano also agreed to inject £45 million into the business.

In the three years prior to 2009, Habitat lost 100 million euros (£88 million) and, though losses had since reduced, Hilco concluded that a return to profitability in the UK was unlikely in the near term as many of the stores were expensive and poorly-located for a furniture retailer.

The collapse of Habitat completes a terrible week for UK retailers, as consumers cut back in the face of the squeeze on household incomes.

Homeform, the owner of Moben kitchens, bathroom chain Dolphin and Sharps bedrooms, said yesterday that it intended to appoint administrators, putting 1,300 jobs at risk, while on Wednesday Comet owner Kesa said it was considering a sale of the electricals retailer after it posted losses of £8.9 million.