Chill wind blows on the high street as more retailers suffer

FURTHER turmoil hit the high street yesterday as discount department store group TJ Hughes prepared to appoint administrators, Thorntons and Carpetright announced store closures and administrators said they would shut down 33 Jane Norman shops.

As shoppers freeze spending on non-essential purchases, retailers are feeling the squeeze and more bad news is seen as inevitable.

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Yesterday Carpetright’s chairman and chief executive Philip Harris said these were the worst conditions he had seen on the high street for over 50 years.

Many UK retailers, particularly those selling discretionary items, have been struggling as consumers grapple with rising prices, subdued wages growth, a stagnant housing market, Government cutbacks and fears of interest rate rises.

Yesterday department store TJ Hughes said it had filed for administration, putting some 4,000 jobs at risk.

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The chain, which runs 57 stores including four in Yorkshire, has lined up Ernst & Young as administrators although the stores could be sold before then.

TJ Hughes was bought out by its management team in March in a deal that was funded by Leeds-based turnaround specialist Endless.

Yesterday a spokesman for Endless denied reports that the group is considering carrying on the business with 20 to 30 of the 57 stores.

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He described the collapse of TJ Hughes as “very disappointing”.

“Endless fixes broken companies. Most of the time they get it right, but sometimes they don’t get it right,” he added.

It also emerged yesterday that nearly 400 staff at fashion retailer Jane Norman are to lose their jobs after administrators failed to find a buyer for 33 stores.

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Jane Norman, which employs 1,600 staff, shut its 94 stores and appointed Zolfo Cooper as administrator on Monday after it became the latest victim of the squeeze in consumer spending.

Zolfo said it had been unable to find a new owner for 33 stores, impacting on 290 jobs, while 106 positions at its London head office will also be axed.

However, it has agreed to sell 33 stores to knitwear retailer Edinburgh Woollen Mill under a ‘pre-pack’ deal that will see the Jane Norman name survive on the high street and will save 396 jobs at the shops in question. Zolfo is also in discussions with buyers about a further 28 stores in a bid to secure their future.

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Carpetright, the UK’s biggest floor coverings retailer, said it is bracing itself for two more years of tough trading conditions as cash-strapped consumers decide a new carpet is not a priority.

The group, which has issued three profit warnings this year, posted an expected 40 per cent slump in 2010-11 profit and said it would not pay a final dividend. It made an underlying pre-tax profit of £16.9m in the year to April 30.

The group is to focus on “self-help measures” to improve its performance, including exiting up to 75 UK stores as leases expire over the next two years, downsizing its Ireland operations, expanding its bed business and developing its website.

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Chocolatier Thorntons, which has 40 stores and franchises in Yorkshire, said it would close a third of its own stores over three years.

The 100-year-old group, which is going through a major shake-up of its high street chain, expects at least 13 per cent of its workforce to be affected as part of the restructuring.

Chief executive Jonathan Hart said: “The number of staff involved will be somewhere between 500 and 750.

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“Although clearly we will do everything we possibly can to offer alternative employment in the remaining estate.”

Thorntons is closing a minimum of 120 stores over three years. The company also said it would look at closing up to a further 60 stores over the same period.

In the last week two other retailers have lined up administrators, home furnishings firm Habitat UK and HomeForm, the owner of Moben Kitchens and Dolphin Bathrooms.

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On a brighter note Doncaster-based furniture store DFS said that sales in the first nine months of its financial year fell 0.7 per cent to £486m, but it is pressing ahead with plans to open eight new stores.

DFS chief executive officer Ian Filby said: “We are pleased to report that our financial performance remains firmly on track, despite the challenging trading environment.

“Although trading conditions remain exceptionally demanding for all UK retailers, we were fully prepared for that outcome in our plans for the year.”

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