Comet to go into administration
The most notable high-street demise since Woolworths.
Electrical retailer Comet is set to become the latest in a mounting list of casualties on Britain’s struggling high-street, putting 6,500 British jobs under threat.
The 240-store business today confirmed that it is likely to go into administration next week, becoming the 29th high street retailer to do so this year.
OpCapita, which owns Comet, has lined up Deloitte to serve as administrator. The company bought electrical retailer just 8 months ago for the token sum of just £2 from Kesa Electronics after it suffered operational losses of around £35m in 2011.
Comet had come under intense pressure to pay up front for stock ahead of the crucial Christmas trading season after credit insurers scaled back cover to its suppliers.
The chain had also felt the effects of a decline in consumer confidence, as cash-strapped shoppers turned to the internet for their waning appliance purchases. Last month, the shift to online retailing prompted Argos to cut 50 stores to focus investment on its online retailing arm.
“The mooted collapse of Comet will come as little surprise given weak sentiment and the shift towards online channels for consumer electronics”, said Jon Copestake, a retail analyst at the Economist Intelligence Unit.
Comet said in a statement that is was “urgently working” to ensure a future for the company. In the meantime, Deloitte will run the business as usual whilst it assess options for liquidation, sales, and closures – although it is unclear what the ultimate outcome will be.
Consumers have been advised to use gift cards or vouchers while stocks last. Customers with outstanding orders have been assured their purchases will be delivered regardless of the announcement.
Market rivals Dixons benefited from the news, with share prices ballooning by 15 per cent. Argos shares rose by 6 per cent.
A string of closures have blighted Britain’s ailing high-street in recent times, with the recession felling a number of big retailing names, including Clinton Cards, Woolworths and Game. Last month, more than 2,000 jobs were lost at JJB sports after administrators failed to find a buyer.
A recent report published by PwC and the Local Data Company estimated that the period during July and August saw an average of 30 high-street store closures a day.