The writing’s on the wall for Clinton Cards after administrators Zolfo Cooper announced this week that hundreds of stores will have to be shut down. The closures will include the ‘Birthdays’ chain in its entirety, as well as around 200 Clinton Cards stores. The firm has 784 outlets in the UK, and from the affected stores, 2,800 staff will lose their jobs.
How did it get so bad, so quickly? Well, the retailer’s predicament began to worsen this month after its debts of £35m were sold by Barclays and RBS to the retailer’s US supplier, American Greetings. The banks had been giving Clintons some leeway because of its financial situation, but the US firm was not as forgiving – it demanded the proper level of repayments, and Clintons couldn’t put up the cash.
The retailer has been having a rough ride in recent years, with sales falling and market share lost to online card retailers such as Moonpig and Funky Pigeon. Clintons’ sales fell 1.1% to £197.1m in the six months to the end of January 2012, and losses totalled around £3.7m. Given the firm was already being propped up by its loans, its position was weak when the banks finally decided to get out.
CEO Darcy Willson-Rymer only joined from Starbucks last October, and was hoping to make some progress on his strategic review, including a reduction in headcount of around 15% to improve profitability. But margins have suffered over the last 12 months because of the chain’s massive existing stocks, as well as the need to cut prices for a cash-strapped British public.
Rumour has it newsagent WHSmith has expressed in interest in buying the restructured chain from the administrators. But since all but one of the company’s directors resigned from the board last week, there has also been speculation that the retailer’s founder, Don Lewin, may be considering buying back his baby. Is this another pre-pack? We don't know: he is keeping his cards pretty close to his chest…