Ailing owner of Threshers stores loses sourcing chief

Off-licence chain's problems mount as long-serving executive quits

The owner of Threshers, the ailing off-licence chain, is losing its global sourcing chief at a time when it is suffering its "toughest ever trading" and a stock crisis caused by a reduction in credit insurance.

First Quench Group, the private equity-backed company behind the 1,400 off-licence stores of Threshers, Wine Rack and The Local, has also appointed the retail consultancy Javelin to help its turnaround.

The departure of Jonathan Butt, head of global sourcing, comes as First Quench Group is being hit by disrupted deliveries to Threshers stores, resulting from credit insurers scaling back cover for suppliers.

Mr Butt, who has been at the company for 11 years, will depart later this month. He plans to set up his own agency and sourcing business, although he may do some consultancy work for the company.

First Quench Group's auditor, Ernst & Young, issued a "going concern" warning, citing "material uncertainty" that cast significant doubt on its ability to continue trading, according to accounts filed last month. The group made a pre-tax loss of £30m for the period from 16 May 2007 to 28 June 2008, and is struggling to compete against the big grocers who have parked their tanks outside its stores. The private equity firm Vision Capital bought Thresher Wine Holdings in July 2007 for £95m.

Some franchisees said that First Quench's reduction of the management service fee (MSF) was a "token gesture". The group has offered franchisees a temporary MSF reduction of £300 – excluding VAT – a month from 28 June to 26 December 2009, in a letter seen by The Independent.

One franchisee said: "It is very little when I am paying such exorbitant fees each month. Certainly, my own feeling is that it is too late for many shops."

First Quench Retailing produced caveats to its offer, including that any franchisee in dispute with it will not be eligible. In the letter two weekends ago, FQR said it "recognises that the present climate is as tough as it has ever been in both the managed estate and for franchisees".

The company will hold its inaugural franchise council meeting on 28 July to try to address the franchisees' grievances after scores of emails from them.

One franchisee said that Tio Pepe sherry and Bells whisky were the latest deliveries to be disrupted by FQR's stock travails. In recent months, franchisees have also suffered from brands including Beefeater gin, Jacob's Creek grenache shiraz wine and Becks beer not reaching its stores.

Some franchisees are having to make multiple trips each week to cash & carry stores to get products into their shops, but are angry that they have to pay for petrol and that products bought are often up to £8 a case cheaper than FQR's.

An FQR spokeswoman said that credit insurance is a "major issue impacting retailers across the country," but added that FQR had the full support of its largest suppliers.

She added: "The present trading environment is incredibly tough, which is why we have introduced a temporary reduction in the management service fee for six months. We hope this move will help franchisees to further market, promote and grow their business through the summer and autumn months."