Reports this morning suggest that Whittard has lined up Ernst & Young to step in as administrator – possibly as early as this afternoon – after its Icelandic owner Baugur’s funding dried up. The high street chain, which sells posh teas and coffees (plus related accoutrements) and employs about 500 people, must now be in serious danger of collapse. It’s yet another indication of how tough things are getting for Britain’s high street retailers – particularly those with penurious Icelandic bankers...
Baugur bought Whittard in 2005 for a generous £21.5m, at which point it had already been trading for 119 years – founded by Walter Whittard in 1986 as a tea company, it later expanded into coffee and moved to Chelsea after a Second World War air raid. After rapid growth in the 1980s and 1990s, it now has about 130 stores across the UK. But the chain, which relies heavily on flogging its wares to unsuspecting tourists looking for a ‘genuine taste of England’, suffered from the decline in tourism after the 7/7 bombings. And like most niche retailers, it’s struggled to cope with competition from bigger rivals (including the big coffee shop chains).
However, things have gone from bad to worse this year thanks to the woes of its owner Baugur, which along with the rest of the Icelandic economy has fallen into dire financial straits. As Landsbanki cut back its funding lines, it decided to put Whittard up for sale – but despite the relatively measly price tag of £1m, nobody is apparently willing to pay the full whack. The only good news is that there has been some interest from trade buyers and restructuring specialists – so it could end up going into a ‘pre-pack administration’, where a buyer has already agreed to buy it out with reduced liabilities. In other words, there’s still a chance the brand could survive.
In general though, the picture continues to look pretty bleak on the high street. Although reports suggest that footfall was relatively good yesterday, and retailers still have two days to shift their Christmas stock, the heavy discounting that’s going on (apparently more than 80% of the top 100 retailers are currently holding sales) will inevitably hammer profit margins. Indeed, restructuring expert Begbies Traynor cheerily predicted at the weekend that hundreds of high street retailers will go bust next year, regardless of what happens in the coming week.
So if Whittard does collapse into administration, it’s unlikely to be the last...
In today's bulletin:
Whittard of Chelsea teas up administrators
Branson MRSA warning Virgin on the self-serving?
Christmas fun as UBS plays Secret Santa
Turn off the Crackberry this Christmas
Happy Christmas from all of us at MT