Struggling UK Retailers are feeling the pinch

January 3, 2012

It was distressing to read that another stalwart of the high street Barratts went into administration again before Christmas (The owner was previously in administration in 2009). The company operates 191 stores and 371 concessions in department stores around the country. All 3,840 of its staff are now facing a worrying time with their futures uncertain, we can only imagine how difficult a time this is for them having already been there once before in the last few years.

Who knows who will be next and with UK retail sales volumes falling by 0.4% in November 2012, despite heavy discounting by stores there are sure to be many company directors watching their sales figures like hawks in the last week of the crucial Christmas trading period.

This got me thinking about all the other retailers that have either run into serious financial difficulties and many closing their doors completely in recent times and on reflection it is staggering how many once rock solid companies have fallen victim of changing consumer buying behaviour, the growth of online purchase and the increasingly predatory actions of the grocery mults that have grown their market share of non food at their expense. I am not trying to say that those retailers hitting difficulties were not partly responsible for their demise by failing to adapt and change in relation to changing consumer needs but many of them I fear simply were unable to react fast enough.

Here’s a quick (and concerning) overview of the retailers who have not had it so good in recent times!

Jane Norman (1,600 staff, 89 stores and 82 concessions)

Problem: Experienced “severe cashflow difficulties” and depressed sales, resulting in debts of £140m.

Outcome: Entered administration on 27 June. Edinburgh Woollen Mill bought 33 of its stores. However, 95 stores and concessions have closed permanently, resulting in 382 staff losing their jobs.

Habitat (900 staff, 33 stores)

Problem: Low consumer confidence has made it difficult for retailers of big ticket items and the home furnishings store made continuing losses as a result of increased competition from cheaper rivals such as Ikea.

Outcome: Went into administration on 24 June. Home Retail Group bought the Habitat brand and three central London stores and have retained 150 staff, although the remaining 750 staff were made redundant.

Carpetright (2,700 staff, 559 stores)

Problem: Continued weakness in the housing market has led to reduced consumer spending on items such as carpet and flooring. Sales fell 5.2% in the second quarter.

Outcome: Has closed 38 stores since March 2010. Announced £4m cost-cutting plans.

HMV (6,500 staff, 285 stores)

Problem: Sales of CDs and DVDs have been undermined by competition from supermarkets and online downloads. In the three months to September, HMV said like-for-like retail sales were down 15.1%. Total sales, which include the impact of 29 store closures, fell 21.8%.

Outcome: Has closed numerous stores and is refitting others as it attempts to refocus its business on new technology sales. Has also sold its Waterstone’s book stores and its Canadian music retail business.

Focus DIY (4,000 staff, 180 stores)

Problem: Another retail victim of the weak housing market.

Outcome: Entered administration on 5 May. Since then, 55 stores have been sold in three separate deals, securing up to 900 jobs. A further 3,000 staff were made redundant.

Homeform (1,300 staff in showrooms plus 1,500 fitters and designers, 160 showrooms)

Problem: The owner of brands such as Moben, Kitchens Direct, Sharps Bedrooms and Dolphin, has also suffered from the weak housing market.

Outcome: Moben, Dolphin and Kitchens Direct have been closed down, with 557 staff made redundant, although the administrators are still trying to sell the brands. The Sharps Bedrooms business has been sold.

TJ Hughes (4,000 staff, 57 stores)

Problem: Falling sales at the department store chain led to the loss of supplier and credit insurer confidence.

Outcome: Entered administration on 30 June. Lewis’s Home Retail has bought six stores but another 42 have closed with about 2,200 staff made redundant. Its flagship Liverpool store reopened in September.

Thorntons (4,375 staff, 591 stores, including 227 run by franchisees)

Problem: Weaker footfall on the High Street has led to a fall in sales at the chocolate retailer. The company made a loss of £253,000 for the year to 25 June, compared with a profit of £4.4m the previous year. Revenues were up slightly at £218.3m.

Outcome: Has said it will close up to 180 shops over the next three years. Is seeking to grow sales via its website and its commercial division, which sells Thornton-branded chocolate via supermarkets.

JJB Sports (5,200 staff, 250 stores)

Problem: Weak consumer demand led to pre-tax losses for the six months to the end of July of £66.5m, compared with £24m last year. Like-for-like sales fell by 17.7%.

Outcome: Secured its survival with the help of £96.5m in funds from major shareholders. Has shut 18 stores since January, will close 43 more.

Kesa (10,000 staff, 248 Comet stores in the UK)

Problem: Kesa, owner of Comet, reported a pre-tax loss of 9.2m euros (£7.9m) for the six months to the end of October, compared to a profit of 32.4m euros a year earlier. Sales at the UK electrical retailer slumped 18.6% in the six months period.

Outcome: Kesa is selling Comet for £2 to a private equity group. The sale is expected to involve the closure of some of Comet’s 248 stores.

Dixons (23,091 staff, 642 stores in the UK and the Irish Republic)

Problem: Currys’ owner Dixons Retail has faced competition from online retailers, but has also faced troubles with its operations outside the UK. First-half losses widened to £25.3m from £6.9m the year before.

Outcome: Undergoing a store transformation programme, which includes some megastores that bring the PC World and Currys brands together under one roof. There are now more than 30 such stores open in the UK.

Blacks Leisure (3,885 staff, 313 stores)

Problem: The outdoor goods company, which operates the Blacks Outdoor and Millets chains, reported a £16m loss in October and expects below-par Christmas trading. Shares have fallen 90% as supermarkets offer strong competition.

Outcome: Has issued an appeal for a buyer. It has £36m of net bank debt and has appointed accountants KPMG to find potential buyers. Management is targeting a sale by January 2012

Oddbins (400 staff, 85 stores)

Problem: Became the latest specialist wine retailer to be squeezed out by supermarkets, following the collapse of Threshers-owner First Quench in 2009 and Unwins in 2005.

Outcome: Entered administration in April 2011. The Oddbins name and 37 of its stores were bought for an undisclosed sum by EFB Group in May, the wine firm owned by multi-millionaire investor Raj Chatha. Following a review of the business, Oddbins was relaunched with stores getting a makeover and 500 new lines of wine.

Arcadia (23,000 staff, 1,800 stores)

Problem: Sir Philip Green’s Arcadia fashion group, which includes Burton, Top Man and Top Shop experienced a profit slump in the year to August 28.Group pretax profit dropped £80.1m to £133.1m. Total UK VAT inclusive like-for-likes slipped 1.8% on last year while underlying retail like-for-likes were down 4.3%.

Outcome: The tycoon will close around 260 stores over the next three years. Sir Philip is planning to expand his empire overseas by bringing the Top Shop brand to China in the next 12 months.

Author Jonathan Bowden