A MAJOR home improvement brand trading out of John Lewis stores has collapsed into administration impacting hundreds of customers.
The Floor Room, which sold carpets, laminate and other types of flooring has closed all 34 of its concessions.
It is understood hundreds of customers are impacted and 196 members of staff have lost their jobs.
The Floor Room, which traded independently from John Lewis, is a sister company of Carpetright, which filed for administration just last month.
Adam Seres, joint administrator at PwC UK, which has been brought in to oversee the administration of The Floor Room, said: “The Floor Room depended on its sister company, Carpetright, for much of its trading infrastructure.
“Following the latter’s insolvency, management worked to find an alternative solution to preserve the Floor Room’s business as a going concern.
“However, its financial position meant that it was impossible for the business to continue trading.”
PwC said some The Floor Room staff will keep their jobs for now, as the company winds down its operations.
However, 196 head office, customer service and in-home service staff, have already been made redundant.
These impacted workers will receive their legal redundancy pay “as soon as possible”, PwC said.
However, the administrator also said any outstanding customer orders will not be fulfilled.
It urged impacted customers to contact their payment card provider about any refunds.
John Lewis said although it did not own The Floor Room, it was working urgently to see what its winding down meant for customers and staff.
A statement from the retailer added: “If anyone has an outstanding order with The Floor Room, we are committed to doing everything in our power to help and support them.”
It comes after Carpetright filed for administration in July, as administrators PwC sought a “period of protection” to secure additional investment.
Later that month, Flooring retailer Tapi struck a multimillion-pound rescue deal to save the brand and dozens of stores.
However, the pre-pack administration deal still left 200 stores and 1,000 jobs in peril.
It was believed the executives at the retailer were reluctant to approach Tapi about a deal over fears it could gain access to sensitive trading information.
Earlier this month, Bensons for Beds swooped in and bought out 19 former Carpetright sites while also pledging to offer new jobs for ex-Carpetright staff.
It came after Carpetright’s owner, Meditor, a British hedge fund, ruled out buying back the business or investing any more money.
Carpetright, which is one of the country’s biggest floor-covering retailers, said it filed for administration following “financial pressures” after a software attack that disrupted trade in April.
The retailer was then put on the market.
The retailer, founded by Lord Harris of Peckham in 1988, was taken off the stock market in 2019 by its biggest investor, Meditor.
However, the Harris family became one of Carpetright’s biggest challenges as son Martin Harris launched a rival flooring retailer, Tapi, which increased competition.
The 1988-founded icon British chain brought in restructuring experts Teneo earlier this year to examine cost-cutting measures.
Why are retailers closing stores?
RETAILERS have been feeling the squeeze since the pandemic, while shoppers are cutting back on spending due to the soaring cost of living crisis.
High energy costs and a move to shopping online after the pandemic are also taking a toll, and many high street shops have struggled to keep going.
The high street has seen a whole raft of closures over the past year, and more are coming.
The number of jobs lost in British retail dropped last year, but 120,000 people still lost their employment, figures have suggested.
Figures from the Centre for Retail Research revealed that 10,494 shops closed for the last time during 2023, and 119,405 jobs were lost in the sector.
It was fewer shops than had been lost for several years, and a reduction from 151,641 jobs lost in 2022.
The centre’s director, Professor Joshua Bamfield, said the improvement is “less bad” than good.
Although there were some big-name losses from the high street, including Wilko, many large companies had already gone bust before 2022, the centre said, such as Topshop owner Arcadia, Jessops and Debenhams.
“The cost-of-living crisis, inflation and increases in interest rates have led many consumers to tighten their belts, reducing retail spend,” Prof Bamfield said.
“Retailers themselves have suffered increasing energy and occupancy costs, staff shortages and falling demand that have made rebuilding profits after extensive store closures during the pandemic exceptionally difficult.”
Alongside Wilko, which employed around 12,000 people when it collapsed, 2023’s biggest failures included Paperchase, Cath Kidston, Planet Organic and Tile Giant.
The Centre for Retail Research said most stores were closed because companies were trying to reorganise and cut costs rather than the business failing.
However, experts have warned there will likely be more failures this year as consumers keep their belts tight and borrowing costs soar for businesses.
The Body Shop and Ted Baker are the biggest names to have already collapsed into administration this year.
A lack of consumer spending in recent years and a rise in competition are thought to have caused problems for the brand.
Your rights in redundancy
Companies can choose to cut their workforce and employees should understand their rights.
You are entitled to statutory redundancy pay, but only if you have worked at your job for two years or more.
The statutory rate is based on your age, weekly pay and number of years in the job.
You will get:
- Half a week’s pay for each full year you worked aged under 22
- One week’s pay for each full year you worked aged 22 or older, but under 41
- One and half week’s pay for each full year you worked while aged 41 or older.
But it’s capped at 20 years and the max redundancy pay you can get is currently £21,000.
Some companies may offer to pay more than the statutory amount. This will usually be in your contract.
Plus, you are still entitled to any pay you are owed for untaken holiday days at the end of your notice period.
The government has a calculator on its website to help you work out how much you are owed.
Customer rights
PwC has said any customer orders put in before August 9 will not be fulfilled, even if you just laid down a deposit.
The administrator said customers should contact their card provider to find out if they have any protection in place.
For example, if you’ve put down a deposit via a credit card you should contact your provider and make a claim for the deposit under Section 75 of the Consumer Credit Act 1974.
To make a valid claim the goods or service you bought must have cost over £100 and not more than £30,000.
There is also separate protection for debit and pre-paid cards called Chargeback which has to be made through your card issuer.
This allows the card provider to reverse a payment you’ve made, as long as the card provider agrees that your complaint is legitimate.
Chargeback is not a legal requirement like Section 75, so you’re not guaranteed to get your money back.
If you haven’t bought with a credit card and don’t have Chargeback protection, you may still get a refund.
PwC said there may be funds available as part of the administration process which can be used to refund customers, but this isn’t guaranteed.
Any customers waiting for fittings in their home will also not have these fulfilled.
Meanwhile, customers who have bought gift cards won’t be able to use them for now, PwC said.
The administrators said to contact whoever issued the card to discuss your options.
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