Recession hits retail sector

Nov 28 2008 by Gregor White, Stirling Observer Friday

RECESSION HITSRETAIL SECTOR

DOZENS of jobs were under threat in Stirling this week after two leading high street names announced they had called in administrators.

In possibly the most visible sign yet of how deep the credit crunch is now biting, both Woolworths and furniture giant MFI announced they could no longer go on as they were in the face of mounting debts.

In Woolworths’ case that amounted to a staggering £385 million, putting at risk the futures of 815 stores nationwide and some 30,000 jobs in both its shops and wholesale business.

A national institution, the Stirling branch of Woolworths is one of the city’s longest-running stores, having first opened its doors more than 80 years ago, in September 1924.

It has occupied its current site – both before and after the building of the Thistles Shopping Centre – since 1962. It currently employs 61 members of staff.

Management at the store said they were not allowed to talk to the press when the Observer called yesterday (Thursday), though a statement by the company’s board said the decision to go into administration had been taken after they concluded there was “no longer any prospect of those businesses (stores and wholesale) being able to operate as a going concern”.

Administrators Deloitte said there had already been “expressions of interest” in both and also added that the company would definitely stay open through the Christmas period and that staff would be paid as normal.

Meanwhile furniture chain MFI, which previously had premises in Borestone Crecent, St Ninians, before moving to a 7500-square foot store at Springkerse Retail Park in 2003, has also gone into administration.

It blames a combination of factors including falling customer demand, cash-flow difficulties and the withdrawal of credit.

At the time of going to press the firm’s website was “down for maintenance” while the phone at the city branch was simply ringing out.

A statement by their administrators, MCR, said stores would remain open for the time being, but selling display stock only.

“A full review of all customer orders is currently taking place by the Administrators in order to determine which orders it is possible to fulfil,” they said.

“The Administrators will be contacting all customers as soon as is reasonably practical to advise as to whether individual orders will be fulfilled.

“In the event that certain orders are not fulfilled, it is the current intention of management to refund all cash/cheque and debit card depositors and allow credit card depositors to seek a refund from their credit card provider.”

They also added that customer queries about orders or refunds would not be dealt with by individual stores but should be directed to the customer call centre on 0870 607 5054 or by email to enquiries@mfi.co.uk.

John Gorle, national officer with shopworkers’ union USDAW said news of both companies’ difficulties was “devastating” for members.

“Many of the staff have served the companies for many years and are extremely dedicated and loyal and we will be doing everything we can to help them through this difficult time,” he said.

Other national firms with a local presence announcing gloomy news this week included DSG International - owner of Currys and PC World - who reported a half-year loss of £29.8 million, and B&Q owner Kingfisher who said sales there were down nearly nine per cent.

In August the Observer reported growing concern about the number of city centre businesses closing down, though councillor Scott Farmer, portfolio holder for corporate, resources and economy at Stirling Council, said then that it was “too simplistic” to blame it all on the current economic climate, with the city centre economy remaining “healthy”.