The Leicester camera retail store Jessops has finally gone into administration, with Pricewaterhouse Coopers (PwC) being appointed as the administrator in charge. Jessops, like many retailers last year, including Comet and Woolworths, have faced stiff competition from supermarkets and online store, selling their niche market goods.
Jessops was founded in Leicester in 1935, and currently has 192 stores in the UK and employs about 2,000 staff, but the administrators have stated that it was “inevitable” that some stores would have to close. Unfortunately for Jessops, although they are a well known brand in the UK, with a strong reputation for service, its core marketplace had seen a significant decline in 2012, which was forecast to continue in 2013.
And administrators PwC added that additional funding had been made available, but the camera retailer had failed to generate the profits it had planned.
This is not the first time Jessops have faced financial problems, back in 2009, they managed to avoid administration by agreeing a debt for equity swap with its lender HSBC. But it appears that the rise of supermarkets and online stores selling Jessop’s main range and undercutting their prices has dealt a severe blow to the High Street store.
Rob Hunt, joint administrator and partner at PwC, said: “Our most pressing task is to review the company’s financial position and hold discussions with its principal stakeholders to see if the business can be preserved. Trading in the stores is hoped to continue today but is critically dependent on these ongoing discussions. However, in the current economic climate it is inevitable that there will be store closures.”
As was the case with Comet customers who had gift cards and vouchers, PwC added that at present Jessops would not honour customer vouchers or accept returned goods. But Comet did an about turn and finally agreed to honour cards and vouchers so it could be that once the administrators have looked over the books in more detail this may also be the case.
Julie Palmer, a partner at business recovery group Begbies Traynor, said Jessops’ administration was “yet another blow” for the UK High Street and showed that January was a high risk month for retailers.
“With substantial cash outflows on the 25 December quarterly rent day combining with fierce pricing competition during the January sales, it puts significant pressure on finances. The administration of such a household name can only serve to damage consumer confidence further in the months ahead.”
Jessops becomes the first High Street casualty of 2013, following a raft of firms falling into administration in 2012 including Comet, Clinton Cards, JJB Sports and Game Group.
Source: BBC News