Shops pull-out costs 500 jobs
Thursday 23 February 1995
East Midlands Electricity and Yorkshire Electricity are selling 71 Homepower outlets and closing 59 smaller branches. The move is the first retail disposal by a regional electricity company since the Trafalgar House bid for Northen Electric put pressure on the utilities to think hard about loss-making peripheral businesses. "Our strategy is to concentrate on core businesses and retail isn't one of them," East Midlands said yesterday.
John Richards, retail analyst at NatWest Securities, said he expected more of the electricity companies to re-evaluate their retail strategies. "It's just a question of how long the penny takes to drop," he said.
PowerStore, the company that bought 16 stores from London Electricity two years ago, is to acquire the largest Homepower outlets from East Midlands and Yorkshire for £7m.
The remaining 59 outlets will close during April, though customers will still be able to pay bills through PowerStore. East Midlands has also arranged a bill-paying service with Midland Bank and Yorkshire with National Westminster.
The Labour Party immediately attacked the high street withdrawal. Ian McCartney, employment spokesman, said: "The announcement is another example of well-paid utility bosses casually discarding hundreds of loyal, hard- working staff for the sake of a quick buck."
PowerStore said that most of the redundancies would be achieved through early retirement and the severance of short-term contracts.
Homepower, launched in 1992, lost £18m in its first 18 months and a further £6.8m in the six months to September.
PowerStore's chairman, Clive Vlotman, said he hoped to float the business on the Stock Exchange in the next couple of years. Last year it made profits of £1.1m on sales of £31.5m.
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