Major retailer SAVED from administration – but 200 stores at risk of closing
A MAJOR retailer has been rescued from administration, but hundreds of stores remain at risk of closing.
Flooring retailer Tapi has struck a multimillion-pound rescue deal to rescue the Carpetright brand and dozens of stores.
Tapi is understood to have agreed to purchase 54 of the ailing chain’s stores and two warehouses in a pre-pack administration deal that will save 300 jobs, The Times reports.
However, the deal does not include 200 other stores which face an uncertain future, and over 1,000 job losses are on the cards.
It’s understood that Tapi is the only competitor to have put a deal on the table which involves rescuing both jobs and stores.
Carpetright put PwC administrators on standby on Friday as it sought a “period of protection” to secure additional investment.
It was believed the executives at the retailer were reluctant to approach Tapi about a deal over fears it could gain access to sensitive trading information.
It comes after Carpetright’s owner, Meditor, a British hedge fund, ruled out buying back the business or investing any more money.
Meditor owns Nestware Holdings and also owns The Floor Room.
Carpetright filed a notice to appoint administrators two weeks ago, on July 12.
The firm previously said it was using the administration process to finalise additional investments and secure the company’s long-term future.
Carpetright, which is 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.
The retailer was then put on the market.
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 1988-founded icon British chain brought in restructuring experts Teneo earlier this year to examine cost-cutting measures.
Why are retailers closing shops?
EMPTY shops have become an eyesore on many British high streets and are often symbolic of a town centre’s decline.
The Sun’s business editor Ashley Armstrong explains why so many retailers are shutting their doors.
In many cases, retailers are shutting stores because they are no longer the money-makers they once were because of the rise of online shopping.
Falling store sales and rising staff costs have made it even more expensive for shops to stay open. In some cases, retailers are shutting a store and reopening a new shop at the other end of a high street to reflect how a town has changed.
The problem is that when a big shop closes, footfall falls across the local high street, which puts more shops at risk of closing.
Retail parks are increasingly popular with shoppers, who want to be able to get easy, free parking at a time when local councils have hiked parking charges in towns.
Many retailers including Next and Marks & Spencer have been shutting stores on the high street and taking bigger stores in better-performing retail parks instead.
Boss Stuart Machin recently said that when it relocated a tired store in Chesterfield to a new big store in a retail park half a mile away, its sales in the area rose by 103 per cent.
In some cases, stores have been shut when a retailer goes bust, as in the case of Wilko, Debenhams Topshop, Dorothy Perkins and Paperchase to name a few.
What’s increasingly common is when a chain goes bust a rival retailer or private equity firm snaps up the intellectual property rights so they can own the brand and sell it online.
They may go on to open a handful of stores if there is customer demand, but there are rarely ever as many stores or in the same places.
A lack of consumer spending in recent years and a rise in competition are thought to have caused problems for the brand.
The brand currently trades out of 272 stores.
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.