More than 3,700 jobs at risk after Ethel Austin hits the buffers again

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The discount fashion retailer Ethel Austin collapsed into administration for the second time in less than two years yesterday, leaving the jobs of 3,714 staff at its 276 branches hanging in the balance.

The retailer and its sister homewares chain, Au Naturale, fell victim to worse than expected trading in January and a failure to secure a refinancing deal. MCR, the restructuring specialist, was appointed administrator of both chains yesterday.

The fashion business, which was founded by Ethel Austin herself in her living-room in Liverpool in 1934, joins a growing list of shops to hit the buffers over recent weeks, including Adams, the childrenswear chain.

MCR will continue to trade both Ethel Austin and Au Naturale, which has 35 shops, primarily in Scotland, in the short term as it tries to find a purchaser of the businesses as a going concern.

Geoff Bouchier, a partner at MCR, said: "The companies have struggled to secure funders, which in turn has impacted their ability to generate sales revenue." He said that poor trading in January had "severely restricted the companies' cash flow" and warned that MCR was "unable to rule out store closures and redundancies".

Elaine McPherson, the former MK One executive, bought Ethel Austin and Au Naturale out of administration in 2008. Yesterday, industry sources suggested she is considering rescuing both chains again as part of a pre-pack administration.

Jonathan de Mello, director of the retail consultancy at Experian, said: "Given the administration of Woolworths last year which had a major adverse effect on smaller towns – with many ex-Woolworths stores still lying vacant – the administration of Ethel Austin would be a major blow, given Ethel Austin takes fairly large stores in prominent high-street locations in these centres."