Hundreds facing axe as talks over Jane Norman concessions fail

The 95 Jane Norman concessions were subjected to a separate agreement when Edinburgh Woollen Mill, owned by entrepreneur Philip Day, bought the Jane Norman brand and 33 stores from administration four weeks ago.

But it was reported that talks fell apart after Debenhams rejected “unreasonable” demands for “tens of millions” of pounds to continue the partnership and Jane Norman fashions would be removed from Debenhams.

Debenhams is trying to find Jane Norman staff other roles, but the responsibility now lies with the administrator Zolfo Cooper.

Debenhams and Edinburgh Woollen Mill were not available for comment.

Jane Norman suffered “severe cashflow difficulties” after cash-strapped consumers put off non-essential purchases and consumer confidence plunged amid fears over the strength of the economic recovery.

Clothes have also become more expensive as raw materials such as cotton have soared in price, and VAT rose to 20 per cent from 17.5 per cent in January.

The company entered administration last month - Edinburgh Woollen Mill bought 33 stores but no owner was found for a further 35, impacting on 290 jobs, while 106 positions at its London head office will also be axed.

Edinburgh Woollen Mill has a record of turning around troubled companies.

It bought 77 stores from the administrators for textiles business Rosebys in November 2008. They were merged with the assets of furnishings business Ponden Mill to create the 150-strong Ponden Home chain.

Meanwhile, high street fashion chain Zara UK recorded a huge surge in annual profits as it held back on investment in the face of slow sales growth.

The chain, owned by Spanish retail giant Inditex, recorded a pre-tax profit of £15.8m in the year to January 31, up from £618,000 the previous year, according to accounts filed at Companies House.

The company, which has 65 stores in the UK, reported a seven per cent increase in sales, up from £310.6m to £332.4m.

The big jump in profits is understood to be a result of a sharp reduction in capital expenditure - the chain opened no new stores last year and has no capital commitments for 2011.

Zara’s results come at a challenging time on the UK high street, which is being hit by a consumer spending squeeze.

The Zara figures have also been helped by a break into online trade. Zara started to sell its products online in six countries including the UK last September, offering all the products available in the stores at the same price.