UK High Street: More retailers hit by consumer squeeze
Published: 28th Jun 2011 13:35:26
As tough times continue for the UK's retailers, Thorntons is to shut up to 180 stores, while Carpetright has said it may close as many as 50.
Chocolate maker Thorntons said it would shut "a minimum" of 120 shops over the next three years, with the possibility of an extra 60 closures.
Carpetright could close up to 50 shops when their leases run out if it cannot get the rents reduced, it said.
Meanwhile, store chain TJ Hughes is set to go into administration.
Three other retailers have announced over the past week that they had called in administrators in the face of tough trading conditions.
These are fashion retailer Jane Norman; the owner of Moben and Kitchens direct, Homeform; and furniture firm Habitat.
The most recent official figures showed that UK retail sales fell 1.4% in May as cash-strapped consumers cut back on their spending.
Thorntons' store closure announcement followed a strategic review of the business.
There is a serious risk that many thousands of jobs will be lost and many many hundreds of additional shops will become empty and shuttered”
It said the outlets that will shut are among the 364 stores directly owned and run by the company.
Thorntons added that it hoped to replace them with franchised stores "in the majority of locations".
It currently has 227 shops run by franchisees.
Chief executive Jonathan Hart said: "Our goal is to refocus the business across all channels, and seek to deliver industry competitive results over the next three to five years.
"Although we see the prospect of weakness in High Street footfall and consumer sentiment continuing, I am confident that this strategy is right."
The company added that it would continue to expand its commercial division, which sells Thornton-branded chocolate via supermarkets and other retailers.
In addition, it aims to continue to grow sales via its website.
Thornton's issued a profit warning last month.
Carpetright's uncertainty over the future of 50 of its 559 stores in the UK and the Republic of Ireland came after it reported that its annual profits had slumped by 70% in the face of "very challenging trading conditions".
Pre-tax profit for the year to 30 April was £6.6m at the carpet and home flooring group, down from £22.3m a year earlier.
Its trading was hit not just by reduced consumer spending, but also the continuing weakness in the housing market.
Its annual revenues were 6% lower at £486.8m.
The company had already issued two profit warnings earlier this year, and closed 27 outlets over the past 12 months.
Carpetright chairman and chief executive Lord Harris said: "The group faced very challenging trading conditions in the year under review, with fragile consumer confidence producing a weak floor coverings market, leading to a reduction in sales volumes and profitability.
"Against this backdrop we have taken a number of management actions to adapt the product proposition whilst retaining competitiveness in the market."
Shares in Carpetright were 2% lower in afternoon trading, while those in Thorntons were down 5.6%.
Liverpool-based department store chain TJ Hughes said it was planning to appoint an administrator after reporting a downturn in trade.
The Liverpool-based firm employs more than 4,000 people at its 57 stores across England and Wales.
It said it would bring in the administrator over the next 10 days.
The retailer was bought out by its management team in March following the withdrawal of credit insurance for its suppliers.
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Harvard CitationBBC News, 2011. UK High Street: More retailers hit by consumer squeeze [Online] (Updated 28th Jun 2011)
Available at: http://www.ukwirednews.com/news/165758/UK-High-Street-More-retailers-hit-by-consumer-squeeze [Accessed 8th Mar 2014]
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