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.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Mortgage Administrator

£20000 - £25000 per annum: Recruitment Genius: We are a vibrant and establishe...

Recruitment Genius: Payments Advisor

£15000 - £20000 per annum: Recruitment Genius: An experienced Repayments Advis...

Recruitment Genius: Investment Analyst

£25000 - £30000 per annum: Recruitment Genius: This leading provider of financ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Are you looking to take your ...

Day In a Page

A groundbreaking study of 'Britain's Atlantis' long buried at the bottom of the North Sea could revolutionise how we see our prehistoric past

Britain's Atlantis

Scientific study beneath North Sea could revolutionise how we see the past
The Queen has 'done and said nothing that anybody will remember,' says Starkey

The Queen has 'done and said nothing that anybody will remember'

David Starkey's assessment
Oliver Sacks said his life has been 'an enormous privilege and adventure'

'An enormous privilege and adventure'

Oliver Sacks writing about his life
'Gibraltar is British, and it is going to stay British forever'

'Gibraltar is British, and it is going to stay British forever'

The Rock's Chief Minister hits back at Spanish government's 'lies'
Britain is still addicted to 'dirty coal'

Britain still addicted to 'dirty' coal

Biggest energy suppliers are more dependent on fossil fuel than a decade ago
Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests
Mexico: A culture that celebrates darkness as an essential part of life

The dark side of Mexico

A culture that celebrates darkness as an essential part of life
Being sexually assaulted was not your fault, Chrissie Hynde. Don't tell other victims it was theirs

Being sexually assaulted was not your fault, Chrissie Hynde

Please don't tell other victims it was theirs
A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935