Major retailer plunges into administration putting 272 stores at risk
A MAJOR retailer has collapsed into administration, putting all of its 272 stores at risk.
Carpetright has now appointed PricewaterhouseCoopers (PwC) as administrators.
The firm says it is working to finalise additional investment to secure the long-term future of the company.
It comes after The Sun exclusively reported this morning that it was planning the move, which puts 1,852 UK jobs at risk.
Carpetright, one of the country’s biggest floor-covering retailers, said the decision was made following “financial pressures” after a software attack that disrupted trade in April.
This then subsequently impacted plans to restructure and has resulted in the company seeking a period of protection while the sale negotiations continue.
Kevin Barrett, CEO of Carpetright’s owner Nestware Holdings, said: “We remain focussed on securing external investment to ensure as few customers and colleagues are impacted as possible.
“They are our main priority and we are taking all appropriate action to make sure they are informed and supported through this process.”
Mr Barrett added that the company has begun “promising” conversations with interested parties regarding the potential sale.
He said these conversations are “moving in the right direction, encouraging us that Carpetright has a viable future“.
The Times also reported earlier this week that Carpetright had been put up for sale.
Carpetright will continue to trade as normal during this process.
But it puts fresh doubt over the long-term future of the chain, which has 272 stores and employs 1,852 people.
A sale of the business could involve a buyer stepping in to save all, or just parts of the company.
Furniture and homeware sales have slumped across the industry as consumers delay making big purchases and prioritise essential bills.
What does going into administration mean?
WHEN a company enters into administration, all control is passed to an appointed administrator.
The administrator has to leverage the company’s assets and business to repay creditors any outstanding debts.
Once a company enters administration, a “moratorium” is put in place which means no legal action can be taken against it.
Administrators write to your creditors and Companies House to say they’ve been appointed.
They try to stop the company from being liquidated (closing down), and if it can’t it pays as much of a company’s debts from its remaining assets.
The administrator has eight weeks to write a statement explaining what they plan to do to move the business forward.
This must be sent to creditors, employees and Companies House and invite them to approve or amend the plans at a meeting.
A Notice of Intention is used to inform concerning parties that a company intends to enter administration.
It is a physical document which is submitted to court, usually by directors aiming to prevent a company from being liquidated.
Like with a standard administration process, a Notice of Intention stops creditors from taking out any legal action over a company while they try and rectify the business.
The retailer, founded by Lord Harris of Peckham in 1988, was taken off the stock market in 2019 by its biggest investor, Meditor.
However, the Harris family became one of Carpetright’s biggest challenges as son Martin Harris launched a rival flooring retailer, Tapi, which increased competition.
The icon British chain, which was founded in 1988, brought in restructuring experts Teneo earlier this year to look at cost-cutting measures.
A lack of consumer spending in recent years and a rise in competition are thought to have caused problems for the brand.
In April, a spokesperson for Carpetright told The Sun it was “not in planning” for another company voluntary arrangement (CVA), which it last filed in 2018 and resulted in the closure of 92 sites.
What else is happening to homeware chains?
The news today follows a tricky time for home improvement chains, both large and small.
It comes as shoppers have been cutting back on spending following the pandemic.
Plus the recent turmoil in the housing market has meant that homeowners aren’t as focused on DIY projects as they once were.
In the spring, Kingfisher, which owns both B&Q and Screwfix, revealed annual profits slumped by more than a quarter.
The company reported a 25.1% drop in underlying pre-tax profits to £568million for the year to January 31, 2024.
Window and door specialist Everest called in administrators in April leaving customers in the dark about their orders
Last year, the group had previously cautioned profits would slip after a 36% drop in pre-tax profits from £1billion to £611million in the 12 months to January 2023.
Rival Wickes, also reported a 31% fall in profits to £52million on flat revenues of £1.55billion for 2023.
Windows and doors company Safestyle collapsed into administration in October last year.
The company has a manufacturing site in Wombwell, near Barnsley and 42 sales branches and depots across the country.
What other chains have collapsed in recent years?
We have seen several big losses in the last few years including popular discounter Wilko.
Following several failed rescue bids, fellow bargain chain The Range bought Wilko‘s name and intellectual property.
CDS Superstores, trading as The Range and Wilko, relaunched the latter’s website before relaunching stores as well.
Fans of Paperchase were devastated when the retailer disappeared from the high street in April last year.
It fell into administration in February after failing to find a buyer.
This led to the closure of all of its 134 shops including concessions stands in Next and Selfridges, with 900 job losses.
Supermarket giant Tesco bought the rights to the brand and announced earlier this month that it would be returning to hundreds of stores.
Health and beauty chain The Body Shop fell into administration early in 2024 and announced the closure of many of its 200 stores.
Almost 500 staff are set to lose their jobs after 75 stores were earmarked for closure.
Since then, it’s been confirmed that Aurea Holding, an investment business, is in talks to acquire The Body Shop after beating out competing bidders in an auction process.
Ted Baker fell into administration in March 2024 too, with 15 stores having shut by April 19.
In April, it was reported that Next and the Frasers Group were reportedly eyeing up some of the ailing retailer’s stores.
M&Co fell into administration in 2022 but was expected to make a surprise comeback in autumn 2023.
Fellow retailer Yours Clothing bought the M&Co brand and intellectual property after the chain went into administration in December 2022.
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