Black day for the High Street as troubles mount for retailers

The troubles hitting the High Street were laid bare on Wednesday as a cluster of Britain’s biggest brands scrambled to secure their future.

While some are rushing to arrange emergency funds or eyeing store closures to stay afloat, others have again warned on profits. A cocktail of changing shopping habits, a squeeze on consumers, higher business costs and underperforming stores has made it more difficult for retailers to shift their wares.

Troubled flooring chain Carpetright today confirmed plans to shut up to 100 stores as part of a Company Voluntary Arrangement (CVA) and bagged £12.5 million of emergency cash from Meditor, its second-biggest shareholder, giving it some breathing space. It also plans to tap investors for between £40 million and £60 million later in the year to pay debts and curb costs.

“This is very much the nuclear option but one that Carpetright has been forced to take,” said Neil Wilson of ETX. The company will have to pay a £1.8 million fee for the loan — which is almost half of Carpetright’s value, and is due back by September. The hunt for funding comes less than three weeks after it said it will make a “small” loss for the year ending April 28.

Shares in suit-seller Moss Bros plummeted by 30% to 39p after it said it expected profits this year to be “materially lower” than the City had been forecasting. “The year ahead looks like being a very challenging one,” admitted chief executive Brian Brick, who had warned on profits in January. Moss Bros will cut its dividend to preserve cash.

B&Q and Screwfix owner Kingfisher also struck a sombre tone today as pre-tax profits fell 10% to £682 million in the year to end of January despite a 3.8% rise in sales to £11.7 billion. Same-store sales fell by 0.7%.

“Consumer confidence is low, inflation is higher than wages, and housing transactions are down. A lot of elements are not going in the right direction,” said chief executive Véronique Laury (above left). However, underlying profits were up 1.3% to £797 million, ahead of analysts’ expectations, as it tries to simplify the structure of the business. Shares were down 23.4p, or 7%, at 314.30p.

Debt-laden New Look was likely to go ahead with its own CVA as creditors voted on the closure of 60 of its 600 shops and a reduction in rents.

Toy and baby-clothes seller Mothercare today sought to appease investors, saying discussions with its lenders are “progressing positively”, and it has drafted in KPMG to help it overhaul the business. Shares rose 12.8% to 17.71p.

Toy seller Toys R Us today said it will close its distribution centre, making 98 people redundant, after it went into administration at the end of February, putting 3,000 jobs at risk.

Electronics retailer Maplin collapsed on the same day, with 2500 jobs hanging in the balance.