Two more chains go bust as retail meltdown accelerates

Two more retailers have collapsed into administration, becoming the latest victims of the Christmas retail crisis and sparking fears over hundreds of jobs.

USC, the 58-store branded fashion chain backed by the business tycoon Sir Tom Hunter, appointed the accountancy firm PKF as administrator yesterday afternoon.

Sir Tom's investment vehicle, West Coast Capital, has bought USC out of administration in a pre-pack deal that will see USC continue trading from 43 stores, but 15 of its loss-making stores will close.

Meanwhile, Passion for Perfume, a 45-store fragrance chain, has also called in the administrators over the past week. It is understood that the chain's stores will close by 31 December and more than a hundred staff could lose their jobs. Passion for Perfume declined to comment, but Sharon Tippett, a store manager with Passion For Perfume in Barnstaple, is reported to have said: "The store will be closed by 31 December and all 45 shops in the chain will be axed too."

The collapse of USC and Passion for Perfume brings the total of retailers to fall into administration over the past weeks to six. They follow the appointment of administrators by Whittard of Chelsea, the coffee and tea specialist, The Officers Club, the menswear chain, and Zavvi, the entertainment retailer.

Yesterday, Adams, a 260-store childrenswear chain, confirmed it is to enter into administration. Adams said the directors are working with its funders to resolve the situation. Whittard of Chelsea and The Officers Club were bought out of pre-pack administration last week. Sir Tom bought USC, which was founded in 1989, in 2004, but it has struggled since 2006. The pre-pack administration of USC will preserve 1,100 of USC's 1,427 employees. However, about 300 staff – of whom the majority are part-time – are likely to lose their jobs.

Jim McMahon, a partner in West Coast Capital, said: "The survival of the core business could only be secured through this deal."

He added: "Having taken that action we are now confident that with the support of our suppliers and landlords, with whom we are now negotiating, that we can deliver a strong and profitable business with sustainable employment prospects for the remaining staff going forward."

Mr McMahon added that West Coast Capital would "continue to invest in the business".

USC is not the only retail chain backed by Sir Tom to be struggling. He is set to lose a significant part of his stake in the garden centre group Wyevale in a debt-for equity-swap with his bank HBOS, which is imminent. However, the performance of the shoe chain Office, which is also backed by Sir Tom, is understood to be more robust. USC posted a loss of £8.8m in the year to 27 January 2006. However, USC is understood to have suffered poor trading this year, along with many other fashion retailers, and widening losses. USC stocks brands including Diesel, Firetrap, Henri Lloyd and Replay.

While some retailers enjoyed a bumper day on Boxing Day, driven by hefty discounting, retail analysts expect it to come too late for some high-street chains. The corporate rescue and restructuring firm Begbies Traynor expects up to 15 high street retailers to fall into administration before mid-January. Yesterday, Patonz, a global retail network, said that the number of retailers that launched their Boxing Day sale with "Up to 70% off" was 23 – nearly double the 13 recorded in 2007.