Cash-strapped Unwins offloads 40 off-licences

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Unwins, one of Britain's biggest off-licence chains, has closed several stores after running down stocks for months. It is also selling off 40 others, sparking renewed questions over the future of the private-equity owned business.

Unwins has run into so much financial trouble that recently it had to seek an emergency cash injection from its owner, DM Private Equity, to keep it trading over Christmas. DM, which decided in September to restructure the business, is to announce 130 job cuts next Monday, out of a workforce of 2,000, after reorganising its senior sales force.

Staff morale has reached a low point because the company has been running down stocks of wine and beer in some stores for several months.

A number of stores have closed "temporarily" due to staff shortages. At a store in Kingston upon Thames, which closed recently, customers would walk in and find only eight bottles of wine on the shelves, plus cigarettes and some soft drinks. Takings at some stores have fallen from £8,000 a week to £2,000.

Unwins, which was founded in 1843, is the largest off-licence chain in the south-east of England, with 381 stores, including 10 branded as Phillips Newman. The company's stated ambition is to float on the Alternative Investment Market next year. Some people have suggested that DM is not committed to retaining Unwins as an off-licence business, speculating that it was a property deal all along.

DM acquired Unwins in March for £32m including debt, ending 84 years of ownership by the Wetz family. It funded the purchase through a sale and leaseback of Unwins' 96 freehold shops to the property group Helical Bar. Phillip Cook, who is chairman of Unwins and DM, said: "DM has supported Unwins since its purchase in March and continues to do so. It has, however, been necessary to implement a number of 'restructuring' initiatives over the last 10 months, some of which are still ongoing. This has also involved a review and rationalisation of the Unwins supplier base."

The group has cut the number of products it stocks from "several thousands" to "several hundreds". That has led to problems with suppliers. An insider said: "Logistically, it hasn't gone as smoothly as had been hoped."