Littlewoods to axe 3,200 jobs with Index store closures

Littlewoods, the retail group owned by the billionaire Barclay brothers, announced plans yesterday to close 33 outlets of its "Index" catalogue chain, at a cost of more than 3,200 jobs. It will sell the remaining 33 Index stores to its rival GUS, which owns the bigger Argos catalogue business.

Littlewoods, the retail group owned by the billionaire Barclay brothers, announced plans yesterday to close 33 outlets of its "Index" catalogue chain, at a cost of more than 3,200 jobs. It will sell the remaining 33 Index stores to its rival GUS, which owns the bigger Argos catalogue business.

Argos will pay £44m for the 33 stores, in a deal which will also see it acquire the rights to the Index brand. It said sales at the 33 outlets over the year to 30 April 2004 totalled £75m.

Littlewoods said that as well as closing the remaining 33 stores, it would also shut the 93 Index concessions which it runs within its Littlewoods shops. Sir David and Sir Frederick Barclay acquired the Littlewoods group in 2002 for £750m from its founders, the Moores family.

Index currently employs some 4,000 staff, of which just 800 will transfer to Argos. Littlewoods said yesterday it would now be "consulting" with the employees of the closing stores.

David Simons, the chairman of Littlewoods, said: "Index has made a loss in nearly every year of its 20-year history, and has accumulated losses of over £100m despite many attempts by different management teams to turn the business around.

"The decision to divest the business has not been an easy one to make but it is the only solution to a difficult and unsustainable situation. Our concern now is for those employees affected and we will work hard with them and the unions to achieve the best outcome we can."

GUS said it plans to rebrand the 33 stores under the Argos name over a three-month period after completion of the deal, which is expected in July.

Terry Duddy, the chief executive of Argos, said: "The purchase of these stores enables us to extend Argos' proven model of offering better choice, value and convenience to more customers in a cost-effective and efficient way. We are pleased to welcome around 800 Index store employees to Argos."

It is believed the Barclay brothers may now move on to sell the remainder of the group after receiving a series of bids during the first quarter of the year.

Asda and Associated British Foods are thought to be among the companies which have expressed an interest in recent weeks. However, the brothers are expected to get no more than £500m for the rest of the company.

Since buying Littlewoods, the brothers have focused on developing its home-shopping catalogue business, which is now the biggest in the UK.

But the Barclay brothers remain best known for their media interests. Last year, they paid £665m to add the Daily Telegraph, Sunday Telegraph and Spectator to their media empire, which includes The Scotsman, Scotland on Sunday and The Business. Soon after buying the Telegraph group, the brothers announced 300 job cuts. They also own the Ritz hotel in London.