Jessops jobs on the line as chain is 2013's first casualty
Administrator holds out little hope that company will be able to find a buyer
Jessops has become the first high street casualty of 2013, collapsing into administration today and leaving 2,000 jobs hanging by a thread.
The camera store chain, which has 192 stores, called in the accountancy firm PricewaterhouseCoopers as administrator after its trading worsened at the end of last year and HSBC, its main lender, called time on any lingering hopes of a turnaround.
There had been speculation that one or more of its suppliers, such as the camera makers Canon or Nikon, would invest in the 77-year-old retailer to keep it going but PwC said its core market had seen a "significant decline" in 2012 and this was forecast to continue this year.
Rob Hunt, the joint administrator at PwC, said crisis talks in recent days involving directors, lenders and key suppliers had "not been successful".
The administrators also warned that store closures were "inevitable" and industry experts believe they were unlikely to find a buyer, although other retailers will want to buy Jessops' best stores and the brand could survive online.
Jessops will not honour customer vouchers or accept returned goods, dealing a blow to many who received gift cards or presents over Christmas.
The company, founded in Leicester by Frank Jessop in 1935, has been hit by the inexorable shift to online shopping and to smartphones with in-built cameras. The chain made a loss of £5.2m in the year to January 2012.
Jessops' administration follows the collapse of 194 retailers last year, including JJB Sports, Peacocks, Blacks Leisure, Clinton Cards, Game Group, and La Senza. Most emerged from administration under new owners but the electricals chain Comet and the gift retailer Past Times disappeared from the high street.
Its demise will surprise few in the industry, as it has continued to lose money and avoided administration in 2009 only by implementing a painful debt-for-equity swap which saw HSBC take a 47 per cent stake. This led to Jessops delisting from the Stock Exchange in January 2010. HSBC wrote off £34m of loans but left the retailer carrying debt of £20m, according to Retail Week Knowledge Bank. Jessops' final-salary pension fund, which has been closed to new staff since 1997, also ended up owning a third of the retailer.
Mr Hunt said PwC hoped the chain could continue trading, but "in the current economic climate it is inevitable that there will be store closures".
The electricals and entertainment sector has been particularly badly hit by the structural shift to online retailing and the consumer downturn, highlighted by the US giant Best Buy closing its 11 UK stores in early 2012.
HMV, the troubled entertainment chain, is also not out of the woods, following it issuing a "going concern" warning, alongside half-year losses of £37.3m, before Christmas. Trevor Moore, the former boss of Jessops, became HMV's chief executive in September.
Meanwhile, the online entertainment retailer Play.com said it was closing its UK retail business after the Government closed a tax loophole for companies operating from the Channel Islands. Play.com, which is owned by Japan's Rakuten, had benefited from low-value consignment relief, which allowed it to avoid paying VAT on CDs and DVDs sold to the UK below £15.
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