More retailers fighting for survival

Whittard of Chelsea and The Officers Club are the latest chains on the brink of going into administration.

A further two high-profile retailers were on the brink of administration last night as the pre-Christmas collapse on the high street intensified, threatening more than 1,000 jobs.

The Independent understands that Whittard of Chelsea, the 122-year-old tea and coffee specialist, has lined up Ernst & Young as an administrator in case last-minute talks with potential suitors collapse. Meanwhile, the Officers Club, a 160-store menswear chain, is understood to be considering the appointment of PricewaterhouseCoopers as administrator as early as today.

The problems for both groups come amid signs that high-street retailers are struggling to survive what commentators say is one of the most brutal pre-Christmas trading periods since the Second World War.

Whittard – established at 165 Fleet Street in 1886 by Walter Whittard – trades from 127 stores and employs around 600 people. The company has been struggling in recent months, however, offering customers 20 per cent off its tea, coffee, and chinaware.

Baugur, the stricken Icelandic company which owns the company and a swathe of other UK high-street retailers, declined to comment.

However, it is not clear if the firm will do a full-blown administration or a "pre-pack" – where a company is swiftly bought out by new owners with reduced liabilities, such as unprofitable stores or excess stock. Whittard was talking to potential purchasers yesterday, raising the possibility of a pre-pack sale to a trade buyer.

In October, the company appointed KPMG to review its cash management, but it was subsequently put up for sale by its Icelandic owners.

The tea and coffee chain had received as many as five bids from potential purchasers by 12 December, but it is understood that none of them was willing to meet its initial asking price. According to market sources, the owners are believed to have wanted £1m, but this was considered too high by the suitors.

On 25 December, Whittard faces a multimillion pound rent bill for the first quarter of 2009. Both financial firms linked to its future, KPMG and Ernst & Young, could not be reached for comment.

The Officers Club sells T-shirts, jeans and jackets from its outlets across the UK. Like many mid-market clothing chains facing stiff competition from budget rivals, it has found trading tough.

Industry sources said that Dave Charlton, the owner of the Officers Club, may consider buying back the chain as part of a pre-pack administration, which would reduce the liabilities on some of its loss-making stores. Mr Charlton and PwC were unavailable for comment. According to the corporate rescue experts Begbies Traynor, between 10 and 15 retail chains will go bust in the coming weeks as they struggle to meet demands for three months' rent on 25 December.

Woolworths has followed the furniture retailers SCS, Rosebys and MFI, the shoe shop Dolcis and clothing chains MK One and Ethel Austin into administration this year.

Yesterday Woolworths' administrators announced when each of its 807 stores will close over the next two weeks. The first 200 shops will close just after Christmas, with the last closing on 5 January. Around 27,000 workers will lose their jobs. In a further sign that this Christmas will be tough, the number of shoppers was down 8.2 per cent on Saturday and 12.1 per cent on Sunday compared with the same weekend last year, according to Experian's footfall figures.

Takings from 60 mid-market retailers suggest that sales fell by 8 per cent in the first two weeks of December, according to accountants BDO Stoy Hayward.

"My sense is that there has been a drop of 10 to 14 per cent in business across the whole retail sector," said BDO's Rupert Eastell, adding that some companies would be harder hit than others." He said the most vulnerable were businesses that were heavily indebted, those that sold homewares, furniture and DIY stores, and mid-market clothing companies whose ranges could be found cheaper elsewhere.

There are signs that retailers will discount even more heavily in the new year sales, which will begin on Boxing Day. Some stores will begin online sales on Christmas Day, such as Marks & Spencer, which will cut womenswear, menswear, lingerie, home and beauty items by up to 50 per cent.

Nick Hood, of Begbies Traynor, said: "It's neither levels of debt nor top-line sales performance that will matter in 2009 for retailers. It will be credit insurance and the ability to generate genuine profits and to avoid excessive discounting that will matter."

Under pressure: Six retailers feeling the pinch

Land of Leather

Who are they? The sofa specialist has 109 stores in UK and the Republic of Ireland.

Financials Total sales of £232m

Jobs 950

Issues Total sales orders collapsed by 47 per cent for the three months to 2 November 2008. Talks with potential suitors over a sale of the business ended this month. The retailer has suffered from credit insurers pulling cover for its suppliers. It was forced to raise more than £15m through a share issue in the summer.

Opportunity The retailer said it has no debt and hence no reason to pursue a sale. Other retailers in its sectors have collapsed this year creating additional sales capacity for Land of Leather to exploit.



JJB Sports

Who are they? The sports equipment retailer trades from more than 317 JJB stores, eight Clearance stores, as well as 61 Original Shoe Company stores and 24 Qube shoe stores.

Financials Total sales of £811.8m

Jobs 12,000

Issues JJB is battling falling sales and substantial debts. Credit insurers have pulled cover from some of the retailer's suppliers. Bailiffs visited 12 of its stores in the autumn due to late rent payments. JJB closed five of its Qube shoe stores this month.

Opportunity One of only three major retailers in the sportswear and equipment market. It agreed with lenders, Barclays, HBOS and Kaupthing, to postpone the repayment of a £20m bridging facility this month. Instead, JJB repaid £20m of debt to the three banks on a pro rata basis. It has hired Lazard to conduct auction of non-core assets, such as its fitness club division and stand alone shoe chains.

Whittard of Chelsea

Who are they? The 127-store tea and coffee specialist was founded in 1886.

Financials A pre-tax loss of £3.2m for year to March 2007.

Jobs 600

Issues Whittard has suffered from poor sales and too many unprofitable stores in its portfolio

Opportunity If, as expected, it falls into administration, a trade buyer may purchase it and be able to make a profit from a reduced store portfolio. As a company it has few direct competitors on the high street.

Jessops

Who are they? High street and online camera specialist.

Financials Total sales of £325.5m

Jobs Nearly 3,000

Issues Jessops is battling substantial debts and tough trade on the high street, where it faces high rents and competition from big-box rivals and the grocers. Sales of cameras are declining as more customers take pictures with their mobile phones.

Opportunity Jessops has signed an extension of its banking facilities to 31 December 2011, which is on significantly reduced interest rates. There are few, if any, high street retailers that offer its level of specialism. Itsonline sales are growing.



Zavvi

Who are they? 125-store entertainment product retailer, formerly Virgin Megastores

Financials Total sales of £341m for year to 31 March 2007, when it was Virgin Retail

Jobs 2,500

Issues Zavvi has become embroiled in the administration of EUK, the wholesale entertainment division of Woolworths. It owes EUK up to £100m. It is still not selling entertainment products online.

Opportunity With the administration of Woolworths, one of Zavvi's main high street rivals is likely to disappear. Some of Zavvi's stores are in prime locations. Until it was hit by the Woolworths' crisis, trading at Zavvi had been robust, particularly sales of computer games.



The Officers Club

Who are they? Menswear retailer with 160 stores

Financials Made a £794,000 loss in the year to 30 August 2007.

Jobs Estimated 1,500

Issues It is on the brink of administration and has struggled for a few years, losing sales to specialist rivals, such as Blue Inc, and also to mid-market rivals, including River Island and H&M.

Opportunity Dave Charlton, its owner, could buy it back out of a pre-pack administration with reduced liabilities on its unprofitable stores.

News
Denny Miller in 1959 remake of Tarzan, the Ape Man
people
Arts and Entertainment
Cheryl despairs during the arena auditions
tvX Factor review: Drama as Cheryl and Simon spar over girl band

News
Piers Morgan tells Scots they might not have to suffer living on the same island as him if they vote ‘No’ to Scottish Independence
news
News
i100Exclusive interview with the British analyst who helped expose Bashar al-Assad's use of Sarin gas
PROMOTED VIDEO
Sport
Angel Di Maria celebrates his first goal for Manchester United against QPR
Football4-0 victory is team's first win under new manager Louis van Gaal
Arts and Entertainment
art
News
newsIn short, yes
Arts and Entertainment
Rob James-Collier, who plays under-butler Thomas Barrow, admitted to suffering sleepless nights over the Series 5 script
tv'Thomas comes right up to the abyss', says the actor
Arts and Entertainment
Calvin Harris claimed the top spot in this week's single charts
music
Sport
BoxingVideo: The incident happened in the very same ring as Tyson-Holyfield II 17 years ago
News
Groundskeeper Willie has backed Scottish independence in a new video
people
Arts and Entertainment
The Doctor poses the question of whether we are every truly alone in 'Listen'
tvReview: Possibly Steven Moffat's most terrifying episode to date
News
ebooksAn unforgettable anthology of contemporary reportage
News
i100
Life and Style
Cara Delevigne at the TopShop Unique show during London Fashion Week
fashion
News
The life-sized tribute to Amy Winehouse was designed by Scott Eaton and was erected at the Stables Market in Camden
peopleBut quite what the singer would have made of her new statue...
Sport
England's Andy Sullivan poses with his trophy and an astronaut after winning a trip to space
sport
News
peopleThe actress has agreed to host the Met Gala Ball - but not until 2015
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Training Coordinator / Resource Planner - City, London

£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Day In a Page

These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week
The fall of Rome? Cash-strapped Italy accused of selling its soul to the highest bidder

The fall of Rome?

Italy's fears that corporate-sponsored restoration projects will lead to the Disneyfication of its cultural heritage
Glasgow girl made good

Glasgow girl made good

Kelly Macdonald was a waitress when she made Trainspotting. Now she’s taking Manhattan
Sequins ahoy as Strictly Come Dancing takes to the floor once more

Sequins ahoy as Strictly takes to the floor once more

Judy Murray, Frankie Bridge and co paired with dance partners
Wearable trainers and other sporty looks

Wearable trainers and other sporty looks

Alexander Wang pumps it up at New York Fashion Week
The landscape of my imagination

The landscape of my imagination

Author Kate Mosse on the place that taught her to tell stories