Fear grips high street as £225m loss hits Dixons
Friday 24 June 2011
The gloom enveloping the high street deepened yesterday after the owner of the Currys electrical chain sank to a loss of nearly £225m, an influential survey revealed the worst UK trading figures for a year in June and the spectre of the administrator returned.
Homeform – the private equity-backed group behind Moben Kitchens and Sharps Bedrooms – admitted it had filed an intention to appoint administrators, leaving more than 1,300 jobs in the balance.
Meanwhile, 600 jobs were lost at Haldanes, the fledgling grocery chain, as it collapsed into administration and shut 23 of its 26 stores. The CBI's Distributive Trades Survey showed the retail sales balance for the first half of June – the difference between the percentage of stores reporting a sales rise and those with a fall – was negative for the first time in a year.
Clothing and grocery chains posted their weakest sales for well over 12 months, while trading plunged for sellers of durable household goods, footwear and leather.
Some 33 per cent of retailers had an increase in sales volumes between 27 May and 15 June, with 34 per cent suffering a drop, the CBI found.
The resulting rounded-up balance of -2 per cent was down sharply from last month's positive balance of 18 per cent. Judith McKenna, Asda chief financial officer, said: "After a year of growth, high street sales volumes fizzled out in June.
"Consumers are really feeling the pinch as disposable incomes continue to be squeezed by rising prices and weak earnings growth."
Sales were below average for June, with 36 per cent of retailers describing them as "poor" and just 17 per cent "good". Most retailers expect sales to remain flat next month, with a balance of just 2 per cent forecasting a rise.
All UK electrical retailers, from Kesa-owned Comet to Best Buy UK – the chain half-owned by Carphone Warehouse – are finding life tough as consumers baulk at big-ticket products. But the woes of Currys owner Dixons Retail were chiefly related to £309.4m of impairment and restructuring charges. These were largely due to the closure of its operations in Spain and writedowns on its Greek business and online site Pixmania.
It led to the group, which also owns PC World, suffering a loss of £224.1m for the year to 30 April. But John Browett, Dixons chief executive, said: "Sooner or later people will realise the world isn't going to come to an end."
At the distressed end, Homeform – which is owned by Sun Capital and operates Dolphin Bathrooms and Kitchens Direct – remains under the control of its directors as the administration process could take 10 days.
However, the company said: "The directors are close to securing a deal that will safeguard the future of the Sharps (Bedrooms) and Kitchen Direct businesses and have mandated advisers to seek a sale of the Moben and Dolphin brands."
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