Three more power groups abandon retail

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The Independent Online
Three more regional electricity companies pulled out of the cut- throat electrical retailing market yesterday when Eastern, Midlands and Southern Electricity put their loss-making Powerhouse joint venture up for sale.

The move will cost the three partners pounds 140m between them in write-off costs and threaten 3,500 jobs. Brutal competition and the drift to out- of-town shopping were blamed for the decision.

There are 317 Powerhouse stores, of which 30 are out-of-town superstores, with the remainder on the high street. The venture has been a commercial disaster, losing pounds 4.7m last year and nearly pounds 15m the year before.

Seven of the 12 regional electricity companies have now pulled out of the electrical retail market in the last four months. Rumbelows pulled the plug on its 285 shops in February.

A spokesman for Eastern Electricity said: "The market out there is very tough, particularly on the high street, where many customers are now going out of town. We've had a thorough review of the Powerhouse business and feel that it would be better off inside a group where retailing is the core business." The company denied that the venture had been an expensive flop.

The decision to sell the stores follows a flurry of similar moves by electricity companies which are now under pressure to focus on core activities following the hostile Trafalgar House bid for Northern Electric.

In April South Western Electricity sold all its out-of-town shops and 16 of its high street outlets to Norweb for pounds 4m. Manweb pulled out of the market in March when it sold its superstores to Scottish Power. East Midlands and Yorkshire Electricity sold their 71 Howepower stores to the Powerstore chain in February at a cost of pounds 60. The Rumbelows sites were picked up by Escom, a German computer group which is expanding fast in the UK.

In spite of fierce competition in the market, the Powerhouse sites are still likely to find a buyer. Powerstoreformed by a former Dixons director, Clive Vlotman, may be interested in some of the high street Powerhouse sites. Of the regional electricity companies, only Norweb and Scottish Power are still expanding aggressively.