Land of Leather is latest victim of credit crisis

Land of Leather, the 109-store furniture specialist, yesterday became the latest retailer to fall victim to the retail crisis after a dire start to the new year sales, as data revealed that the industry endured its worst December since the early 1990s.

The retailer appointed Deloitte as administrator yesterday, a couple of hours after its shares were suspended at 2.95p, putting more than 1,000 jobs at risk. Lee Manning, the joint administrator and partner at Deloitte, said that it was talking to several interested parties, including trade buyers and private equity firms, about acquiring the retailer as a going concern, but said it was likely that a number of stores would have to close. It is understood that nearly a third of Land of Leather's stores are loss-making.

Land of Leather is the latest furniture retailer to collapse over the past 12 months. Last year, Ilva, New Heights and MFI fell into administration, as did the home furnishings chain Rosebys.

Today, the British Retail Consortium will reveal that underlying retail sales tumbled by 3.3 per cent in December – the worst performance since its survey began 14 years ago. In addition to a dire start to its Boxing Day sales, Land of Leather's woes had been compounded by a lack of credit insurance and bailiffs visiting up to 12 of its stores. Its sales fell 47 per cent over the three months to 2 November last year. Mr Manning said that Land of Leather had struck agreements with 75 per cent of its landlords to pay reduced rents, such as 50 per cent over the coming months, but some landlords had still sent bailiff to stores.

Mr Manning said the withdrawal of credit insurance had "tightened the noose around the company" in terms of its ability to get product into stores. Land of Leather stopped taking cash payments from customers on 30 Dec-ember. Deloitte said that customers who have paid a deposit by credit card or Visa debit card, or indeed have paid a deposit by any means since 26 Dec-ember, will be fully protected. But some customers who paid by cash or by a non-Visa debit card before Boxing Day may have to accept a discount on other stock if the original order cannot be fulfilled.

Separately, Sofa Workshop, the 31-store furniture retailer on the brink of administration, was understood to have stopped taking cash orders yesterday.