CARPETRIGHT will this morning file a notice to appoint administrators, putting nearly 2,000 jobs in jeopardy.
Sources told The Sun that advisers at PwC realised there was no way of achieving a solvent sale of the retailer which has suffered slowing sales. One insider called the business “a real mess”.
Filing a notice of intent to appoint an administrator typically gives a retailer 10 days before it officially goes bust, although it can be cut shorter if needed.
During that time Carpetright will continue to trade while a rescue buyer is sought.
The Times reported yesterday that Carpetright had been put up for sale, but it has since emerged the situation is far more troubled.
Carpetright has 272 stores and 1,852 staff across the UK and has been hit hard by the spending squeeze on Brits.
Furniture and homeware sales have slumped across the industry as consumers delay making big purchases and prioritise essential bills.
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.
As first reported by The Times, sources warned yesterday that shops could close as part of the sales process.
Of course, this is not guaranteed and all Carpetright stores remain open for business while its 3,000 staff will remain in position for now.
The Sun has approached Carpetright for a comment.
The British stalwart, founded in 1988, brought in restructuring experts Teneo earlier this year to look at cost-cutting measures.
The chain currently has 274 stores across the UK according to its website, and is one of the country’s biggest floor-covering retailers.
A lack of consumer spending in recent years and a rise in competition are thought to have caused problems for the brand.
In April, a spokesperson for Carpetright told The Sun it was “not in planning” for another company voluntary arrangement (CVA), which it last filed in 2018 and resulted in the closure of 92 sites.
What does going into administration mean?
WHEN a company enters into administration, all control is passed to an appointed administrator.
The administrator has to leverage the company’s assets and business to repay creditors any outstanding debts.
Once a company enters administration, a “moratorium” is put in place which means no legal action can be taken against it.
Administrators write to your creditors and Companies House to say they’ve been appointed.
They try to stop the company from being liquidated (closing down), and if it can’t it pays as much of a company’s debts from its remaining assets.
The administrator has eight weeks to write a statement explaining what they plan to do to move the business forward.
This must be sent to creditors, employees and Companies House and invite them to approve or amend the plans at a meeting.
A Notice of Intention is used to inform concerning parties that a company intends to enter administration.
It is a physical document which is submitted to court, usually by directors aiming to prevent a company from being liquidated.
Like with a standard administration process, a Notice of Intention stops creditors from taking out any legal action over a company while they try and rectify the business.
What else is happening to homeware chains?
The news today follows a tricky time for home improvement chains, both large and small.
It comes as shoppers have been cutting back on spending following the pandemic.
Plus the recent turmoil in the housing market has meant that homeowners aren’t as focused on DIY projects as they once were.
In the spring, Kingfisher, which owns both B&Q and Screwfix, revealed annual profits slumped by more than a quarter.
The company reported a 25.1% drop in underlying pre-tax profits to £568million for the year to January 31, 2024.
Window and door specialist Everest called in administrators in April leaving customers in the dark over their orders
Last year, the group had previously cautioned profits would slip after a 36% drop in pre-tax profits from £1billion to £611million in the 12 months to January 2023.
Rival Wickes, also reported a 31% fall in profits to £52million on flat revenues of £1.55billion for 2023.
Windows and doors company Safestyle collapsed into administration in October last year.
The company has a manufacturing site in Wombwell, near Barnsley and 42 sales branches and depots across the country.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories