Thousands of jobs at risk as Barratts and Blockbuster fail
Directors at Bradford-based chain left with no choice after investor pulls out of plan to inject £5m
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Tuesday 12 November 2013
Thousands of jobs on the high street were put in danger last night as both Barratts Shoes and Blockbuster collapsed into administration.
For Barratts, it was the third time it has called in the administrators in four years as it struggles to compete in the cut-throat and price-sensitive fashion world. Blockbuster also fell into administration a year ago.
Barratts’ fall puts its 1,035 staff and almost 100 shops at risk, with its administrator Duff & Phelps warning it could not rule out redundancies or closures. The restructuring specialist revealed that a £5m injection had been offered by an unnamed investor, but was withdrawn at the last minute.
“In view of the financial position of the company and withdrawal of that equity offer, the directors were left with no choice but to appoint administrators,” Duff & Phelps’s Philip Duffy said. Barratts went into administration in 2009, and again in 2011.
Another 2,000 jobs were put at risk by Blockbuster, the struggling DVD and video-game rental chain, appointing administrators. Simon Thomas, joint administrator at Moorfields Corporate Recovery, said there were potential buyers for parts of the business, which has 264 stores.
The US private equity firm Gordon Brothers Europe first rescued Blockbuster in March but failed to revive the company.
Patrick O’Brien, at Verdict Research, said: “There may be signs of a pick-up on the high street but it has been damaged over a number of years and a lot of chains have been hard hit.”
However, describing Barratts and Blockbuster as “zombies”, he said it was unlikely more big names would collapse by the turn of the year.
He said it was particularly disappointing that Blockbuster had not managed to last until Christmas, given its strength in the video games market amid the launches of the new PS4 and Xbox terminals.
Other analysts were reminded of the flurry of retailers going under last Christmas, when Blockbuster, HMV and Jessops all fell. Verdict predicts that the current quarter will see retail sales up 2 per cent on last year but notes this is against a poor showing last year.
Consumer confidence has shown signs of improving this year, while employment levels, a key contributor to the state of the high street, have been improving.
On the downside, however, wage growth has been weak and failed to keep up with inflation, leaving many shoppers feeling unable to afford to splash out this Christmas.
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