Iconic UK high-street retailer Woolworths is filing for administration following the collapse of talks on Wednesday evening to save the debt-laden business. The demise of 99-year-old Woolworths puts 30,000 jobs at risk, making it the largest retail failure in the UK for years.
Iconic UK high-street retailer Woolworths is filing for administration following the collapse of talks on Wednesday evening to save the debt-laden business. The demise of 99-year-old Woolworths puts 30,000 jobs at risk, making it the largest retail failure in the UK for years.
Deloitte has been named as the administrator and is working with the board of Woolworths to ensure the stores remain open and the staff get paid, at least through the Christmas period.
London-listed Woolworths has a nationwide network of 800 stores which sell a wide range of products from sweets to clothes to DVDs. The company generated revenues of almost £3 bn (EUR 3.4 bn) and adjusted profit of £28.3 mln (EUR 34 mln) in the 12 months to February 2008. But Woolworths is weighed down with £385 mln (EUR 459 mln) in debt. Last-ditch talks on Wednesday, reportedly called at the insistence of the UK government, failed to reach an agreement to keep the business afloat. The government was not willing to inject public funds into the ailing chain.
In a regulatory statement on Thursday, the board of Woolworths confirmed that discussions relating to the potential sale of its retail business had been halted.
'As a consequence of the termination of those discussions, the boards of Woolworths plc and Entertainment UK Ltd have concluded that there is no longer any prospect of those businesses being able to operate as a going concern. Accordingly, the boards of both companies last night resolved to file petitions for administration in the High Court.'
However, Woolworths said it is still in talks with BBC Worldwide about the possible sale of its 40% interest in their 2 Entertain DVD joint venture.
Trading in Woolworths' shares were suspended on Wednesday ahead of the outcome of the failed talks. The suspension came a week after Woolworths confirmed that it was in talks about the potential sale of its retail property. A media report suggested Woolworths may be ready to sell its 815 stores in the country. Woolworths did not comment on the suggestion that the property portfolio could be sold for a nominal fee of £1 to restructuring specialist Hilco.
MFI, a UK furniture retail group with 200 stores, also filed for administration this week, another casualty of the financial crisis.
