Retailers on the brink as downturn deepens

*MFI, Hardy Amies near administration
Click to follow

More blood was shed on the high street yesterday when a variety of retailers revealed contrasting trading woes and it emerged that the furniture retailer MFI is on the brink of administration.

MFI, which has 200 stores, could go into administration as early as Monday and is understood to have lined up the restructuring firm Kroll as administrator. An MFI spokeswoman said: "The owners and executive team at MFI are looking at a number of options for the future of the MFI business." Kroll declined to comment.

The revelation came as the furnishings retailer Rosebys collapsed into administration yesterday and the Savile Row tailor Hardy Amies said administration was an option after its major shareholder failed to provide further financial support for the former dressmaker to the Queen. Trading in the AIM-listed retailer's shares was suspended.

Shares in the sports accessories and clothing retailer JJB Sports halved after it posted dire half-year sales and plunging profits, but denied it had breached a banking covenant. Meanwhile, even two of the sector's strongest retailers, the department store John Lewis and its stablemate supermarket Waitrose, posted disappointing weekly sales.

The tales of woe illustrate the depth of the consumer downturn, putting down an ominous marker for the Christmas trading period. In addition to MFI, speculation is rife there will be further retail administrations next week, partly because Monday is the day when quarterly rent payments are due.

Rosebys, which has appointed KPMG as administrator, made a loss of £6m in the year to 31 March. KPMG is continuing to trade the chain while it reviews Rosebys' finances. None of its 2,000 employees has been made redundant.

KPMG's joint administrator Howard Smith said: "In common with many retailers, the group has experienced difficult trading conditions, leading to continuing losses. Rosebys has recently sought to refinance, but this did not prove possible in the current economic climate. We are looking for offers for the whole or any part of the business."

Hardy Amies requested further financial support recently from its major shareholder, Arev Brands, but the Icelandic investment firm declined the request on Thursday afternoon. In a statement, Hardy Amies, which has five UK stores and a number of stockists, said: "Directors are considering the options for the company in light of this news, which may involve placing Hardy Amies into administration." The Anglophile owners of Arev, which also has as a private equity arm Kcaj, are thought to have taken the name of both businesses from the Coronation Street characters, Jack and Vera Duckworth. Kcaj and Arev spelt backwards are Jack and Vera.

For the year ended 31 December 2007, Hardy Amies delivered a loss of £1.1m, down from £1.9m a year earlier, on sales up 35 per cent to £1.6m. Its founder Sir Edwin Hardy Amies, who sold the business in 2001, was the Queen's official dressmaker from 1955 to 1990.

JJB Sports denied claims it has breached its banking covenants, after posting an interim loss of £9.7m for the 26 weeks to 27 July, against a profit of £8.3m for the same period last year. In a statement, the retailer said: "JJB Sports reaffirms that, on the advice of its lawyers, DLA Piper, and accountants, Deloitte and Touche, it is refuting claims that, at its financial year-end, there was a breach of a covenant relating to its £15m banking facility with Bank of Scotland."

Meanwhile, sales at John Lewis tumbled by 5.6 per cent to £47.34m for the week to 20 September. The group's grocery business Waitrose delivered flat sales for the period, implying negative like-for-like sales volumes given that food inflation for the sector is about 3 per cent.