Dolcis expected to call in administrators

The embattled shoe retailer Dolcis is expected to call in the administrators this weekend after it unexpectedly paid its employees to the end of this week.

Speculation that the company, which usually processes its payroll at the end of each month, is on the verge of collapse has been mounting since its private equity backers Epic pulled out in December. Epic sold its stake to Dolcis management after filing, and subsequently abandoning, a notice to appoint administrators.

Epic's exit prompted a defence of Dolcis from John Kinnaird, the Scottish entrepreneur who bought the company from Alexon in 2006. At the beginning of this year, he said that Dolcis was "in the final stages of securing a new partner", adding that a deal would hopefully be completed by the middle of January. No details of an alternative backer have emerged since and a source close to the board of directors yesterday said that the company would enter into administration at the end of this week or early next week.

Dolcis refused to comment on the matter yesterday, but the board is believed to have sanctioned yesterday's payment to its employees before a formal announcement about the company's problems.

Staff at a number of Dolcis stores were by turns surprised, confused and concerned at receiving the pay cheques compensating them up to 19 January. One employee at a store in Scotland said that most people were "none the wiser" after being paid unexpectedly, adding: "We had no notice about this. They are paying us up to 19 January, which is three weeks' pay. Everyone's in panic."

"I don't understand, to be honest," said another employee at a different store, "I haven't heard anything and this is quite surprising."

Dolcis currently operates 65 high-street branches across the county. In addition, the company has 150 concessions, most of which are located within Bay Trading and Envy retail stores.

The company was bought by Alexon, the London listed retailer behind the Ann Harvey fashion stores, in 1998. In November 2006, John Kinnaird, who had worked at Sports Division with Sir Tom Hunter, bought Dolcis for £2.7m with backing from Epic.

News of problems at Dolcis comes amid increasing concern on the high street as small and large retailers feel the pinch of a consumer slowdown. Its rival Stead and Simpson is also reported to be struggling in the tough trading climate.