Job fears as retail chains face collapse

Published on Monday 8 February 2010 20:36

TWO more high street names have fallen victim to the recession, raising a question mark over the future of about 3,700 workers.

Administrators at MCR, the business restructuring specialist, last night said they could not rule out store closures and redundancies at discount retailer Ethel Austin and its sister homewares chain Au Naturale.

It is the second time in as many years that both brands have faced collapse.

Ethel Austin, which can trace its roots back almost 80 years and has a network of about 300 stores, was bought out of administration in May 2008 by Scottish retail specialist Elaine McPherson, previously the chief executive and joint owner of MK One.

Shortly after, she emerged as the buyer of 46 Au Naturale stores, almost all of them in Scotland. There had been 159 Au Naturale outlets before the Glasgow-based retailer was put into administration earlier in the year amid tough trading conditions and a dearth of funding.

MCR yesterday said that recent funding woes had been compounded by bad weather at the height of the key January sales period.

Geoff Bouchier, a partner at MCR, said: "There is no doubt in our mind that the onset of the global economic crisis has hit the retail sector particularly hard. As a consequence of this, the companies have struggled to secure funds, which in turn has impacted their ability to generate sales revenue."

He said the companies would trade as normal in the short term "with a view to finding a purchaser for the businesses as a going concern". But he warned that "there are no guarantees that purchasers will be found" for the chains.

Jonathan De Mello, director of retail and property at industry analyst Experian, said: "Locations like Newport, Cumbernauld … and Airdrie will be among the hardest hit, as Ethel Austin has very large stores in all these towns, in addition to still-vacant Woolworths stores."

McPherson had pledged to return Ethel Austin to its "former glory" with an overhaul of the stores and clothing range.

The move helped protect 2,500 jobs at the time, although more than 450 jobs and 33 stores were earlier axed by administrators.

Ethel Austin is headquartered at Knowsley, Merseyside, just ten miles from where the business was founded by Ethel Austin and her husband George Austin in their Liverpool council house in 1934.

McPherson headed budget chain MK One until its sale to Icelandic owner Baugur in 2004 for 55 million – but MK One faced similar difficulties to Ethel Austin in more recent years, collapsing into administration twice in 2008.

A string of UK retailers have fallen prey to the economic downturn, including Woolworths, furniture group MFI and, more recently, off-licence chain Threshers and bookstore Borders UK.

There are 3,714 staff employed across Ethel Austin and Au Naturale, including 400 head office staff.

Usdaw, which represents 700 of the workers at Ethel Austin, said the news was a "terrible blow".

National officer John Gorle added: "The announcement that Ethel Austin has again gone into administration isn't a complete surprise as we were aware the company had financial difficulties."