Woolworths to close all stores by 5 January
30,000 staff face redundancy as retailer fails to find a buyer
Thursday 18 December 2008
Woolworths is to close all its 807 stores by 5 January, raising fears that nearly 30,000 staff could lose their jobs at the 99-year-old retailer.
Deloitte, Woolworths' administrator, said it will start to close the first batch of 200 stores on 27 December and the remaining 600 outlets will shut on 30 December, 2 January and 5 January, although it is continuing to try to find a buyer.
Neville Kahn, the joint administrator and partner at Deloitte, said: "We are moving to a closing-down sale period." Between now and the end of the week, closing-down signage will appear on stores and give customers a countdown to the store closure dates.
If a buyer does not emerge by 5 January, then 22,000 permanent staff and 5,000 temporary staff will be made redundant, although some will be kept on for a short period. The retailer's employees, as well as 500 staff in its distribution centres, will get paid until the end of the year. They will then have to apply for statutory redundancy.
Usdaw, the shop workers' union, said it was "appalled" at the treatment of Woolworths employees. John Gorle, Usdaw's national officer, said: "We are shocked that staff will only be given 10 days' notice of store closures and deeply disappointed that no buyer has yet been found. Redundancy is devastating at any time of the year, but particularly so at Christmas."
The stock clearance sale at Woolworths is being stepped up and the existing 20 per cent to 60 per cent discounts will be increased as stores approach their closing date.
More than 50 million new items, including DVDs and CDs, will be pumped into its stores this week. In a further sign that will worry rivals, such as HMV, Mr Kahn said the new single by the X Factor winner Alexandra Burke is being sold for £3.17. "We understand this is the lowest price on the high street," he said.
Mr Kahn said that while Deloitte continued to seek a buyer for Woolworths' retail division and its wholesale division, Entertainment UK (EUK), more than 300 of the Woolworths stores were "under offer".
He declined to provide names, but said the buyers included food, fashion and value retailers. Poundland, Tesco, Sainsbury's, Iceland and Morrisons are understood to be interested in buying batches of stores.
Deloitte said it was passing the names of employees to the retailers seeking to buy the stores, where data protection laws permit. However, the stores are likely to close for a few months as the acquiring retailers refurbish them, and staff will have to apply for jobs with new employers.
While Mr Kahn said there was "considerable interest" in the remaining 500 stores, the reality is that hundreds could remain closed after 5 January. He said there was "no guarantee" that more than 500 suppliers, who are making claims on Woolworths' retail arm and EUK, would get paid. "It is clear that the creditors will not get paid in full, but how large their loss is we are not able to quantify now," he said.
Given the scale and complexity of negotiations with creditors, Deloitte said it expected to be working on the administration for months to come. A number of toy suppliers, music producers and film studios have engaged lawyers to get their money back.
Mr Kahn also said "various parties" were interested in purchasing the group's Woolworths, Worth It, Lady Bird and Chad Valley brands. However, Mr Kahn said: "I am confident that at some point Woolworths will reappear on the high street."
EUK will trade beyond 5 January, but its prospects appear to be bleak.
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