Jobs threat as Habitat set to disappear from everywhere but London

THE UK arm of Habitat has gone into administration in a move threatening up to 30 stores, including those in Batley, Harrogate and York, and around 900 jobs.

Separately, current owner Hilco has struck a deal with Homebase and Argos owner Home Retail Group allowing it to buy the UK rights to the Habitat brand in the UK, the website and three stores in central London for £24.5 million.

Hilco said the stores not included in the deal will trade as normal while the administrator, Fraser Gray of Zolfo Cooper, talks to interested parties.

The private equity firm added that it is in advanced talks to sell the more successful European operation, which consists of 27 stores in France, six in Spain and five in a Germany, to a major European listed business.

Hilco said Habitat posted losses of 100 million euro (£88 million) over the past three years and a return to profitability in the UK appeared unlikely in the near term as many of the stores were expensive and poorly-located for a furniture retailer.

The collapse of Habitat completes a terrible week for UK retailers, as consumers cut back in the face of the squeeze on household incomes.

Homeform, the owner of Moben kitchens, bathroom chain Dolphin and Sharps bedrooms, said yesterday that it intended to appoint administrators, putting 1,300 jobs at risk, while on Wednesday Comet owner Kesa said it was considering a sale of the electricals retailer after it posted losses of £8.9 million

Set up by design legend Sir Terence Conran in 1964, Habitat came to epitomise London’s young and trendy image during the Sixties with a range of pastel colours and products based on Conran designs.

Private equity group Hilco acquired the debt-laden Habitat in 2009 from the Ikano Group, the company founded by the Kamprad family which owns Ikea. It paid almost nothing for the chain, which was carrying heavy debts, while Ikano also agreed to inject £45 million into the business.

Terry Duddy, Home Retail’s chief executive, said the acquisition would safeguard 150 of the 900 affected jobs, adding that the strategy was to put concessions in stores and build up the website.

Mr Duddy denied it would be a problem putting such a famous style-led brand alongside a DIY business and said its research had shown there was a strong overlap between buyers of Homebase and Habitat products.

The three London branches - in Tottenham Court Road, King’s Road and Finchley Road - will serve as showrooms to help develop the online business of Habitat, he said. The Habitat design team is to stay with the group, Mr Duddy confirmed.

Home Retail does not own the right to the Habitat brand name outside the UK and this will likely be sold with the European business, which is profitable and larger than the UK operation.

Sisties design revolution

Habitat opened its doors in the middle of the Swinging Sixties.

A cultural revolution was already under way in music and fashion, and now it was the turn of furniture.

The chain was founded by Terence Conran, the first store opening on an unfashionable stretch of Fulham Road, west London, in 1964.

Its early success was said to be due, at least in part, to the sale of cheap pasta storage jars - just as the British were developing an appetite for dried pasta.

But they had also developed a taste for cool.

The austere and drab furniture of the Fifties was out, and contemporary, affordable design was in.

The popular message was that good design could be an inspiration and a delight.

The sales space was all-important, and the first shop’s whitewashed walls and high ceilings became the template.

The kitchens and living rooms on display suggested how furniture, lighting, mirrors, and vases could all fit together.

The shop was the canvas on which the goods could be displayed, often in a riot of colour and influenced by trends from around the world.

It attracted a new generation of middle-class, educated young professionals, drawn to the smooth lines and sleek surfaces.

Habitat became a British institution, but it also expanded into Europe, with stores in France, Spain and Germany.

In the Eighties the company merged first with Mothercare and then British Home Stores.

And then, in 1992, it was bought by the Ikano Group, the company founded by the Kamprad family, owners of Ikea.

The Swedish furniture giant came to provide a new model for the industry, with its giant out-of-town stores and flat-pack simplicity.

Habitat was left struggling and faced criticism for poor customer service and over-pricing.

The company lost more than £13.4 million in the year to March 30 2008.

Private equity group Hilco acquired the debt-laden chain in 2009. It paid almost nothing, while Ikano agreed to inject £45 million to rid itself of the business.