CRUNCH TIME FOR THE HIGH STREET
FASHION retailer Jane Norman was on the brink of collapse this weekend, after all of its stores across the UK were closed for business, signalling imminent insolvency.
Zolfo Cooper, the US accounting firm, has been lined up to put the distressed fashion retailer into a pre-pack administration, which could be approved in court as soon as today.
1,600 jobs are at risk from the closure of its 90 stores over the weekend after PricewaterhouseCoopers (PwC), which had been hired to find a buyer, failed to sell the business.
Jane Norman is the latest in a string of high street names to take a hit in the aftermath of the economic crisis as inflation rises and consumers are hit by the rise in VAT.
Habitat, the furniture retailer founded by Sir Terence Conran in 1964, last week appointed administrators to sell its 33 stores citing cashflow difficulties and the “current tough trading environment for retailers”.
Homeform, the owner of Dolphin Bathrooms and Moben Kitchens, also buckled, putting more that 1,300 jobs at risk.
The electrical goods market has been amongst the hardest hit by the fall in consumer spending, with the French company Kesa admitting last week it was considering “strategic alternatives” for Comet, its British business, including the sale of the chain and delisting from the London market. This came after Dixons Retail reported more than £300m in write-downs on Thursday resulting in a pre-tax loss of £224.1m.
Meanwhile, the card maker Clinton Cards, which has issued two profit warnings this year, is also facing gloomy prospects as its management considers a restructuring that could lead to a severe number of store closures.
PwC research showed that retail insolvencies increased by six per cent to 448 in the first quarter of 2011. The accountancy firm warned that the rest of 2011 is likely to be very tough for the retail industry as “a combination of falling consumer confidence, rising inflation and commodity price increases hits home.”
The pressure was ramped up for many retailers last week when they were faced with demands for quarterly rental payments.
Industry sources have said that Debenhams, which houses a number of Jane Norman concessions, is still the frontrunner to take over the rights to the brand and its stock. Debenhams and PwC declined to comment.