Camera firm Jessops first high street casualty of 2013
HIGH street camera chain Jessops went into administration yesterday, putting thousands of jobs at risk and marking a bleak start to the new year for Britain’s struggling retailers.
The firm is the first casualty of a year which analysts have warned could see scores of household names go to the wall.
Administrator Price Waterhouse Coopers (PwC) said even if a rescue plan could be put in place, job losses and store closures were “inevitable”.
In a further blow to the high street, Marks & Spencer last night revealed a bigger-than-expected slump in clothing sales over Christmas. Non-food sales at the retail bellwether were down 3.8 per cent in the 13 weeks to 29 December.
Jessops, which has 12 of its 192 stores in Scotland and employs about 2,000 staff across the UK, is Britain’s only nationwide specialist camera retailer.
It has suffered in recent years from online competition and the boom in camera phones, which has hit demand for digital cameras.
Administrator Rob Hunt said PwC was holding discussions with stakeholders to see if the business could be preserved.
He said: “Trading in the stores is hoped to continue today, but is critically dependent on these ongoing discussions. However, in the current economic climate, it is inevitable that there will be store closures.”
PwC said Jessops’ core market had seen a “significant decline” in 2012 and its position had “deteriorated” in the run-up to Christmas, as a result of falling confidence in UK retail.
Forecasts for 2013 indicated the decline would continue.
The administrator said extra funding was made available to the company, but Jessops did not generate the profits it had planned over Christmas.
Mr Hunt said discussions to raise additional financial support had been held between the directors, lenders and suppliers over the last few days.
But the directors had appointed administrators in light of “irreconcilable differences”.
PwC said Jessops was not in a position to honour customer vouchers at present and it would also not accept returned goods.
The news came weeks after Comet went to the wall, with more than 6,000 job losses. JJB Sports, Clinton Cards and Peacocks also went into administration last year but were partially rescued.
A spokeswoman for the Scottish Retail Consortium said: “Last year was very challenging for retailers and going into 2013 there is no sign of change.
“We are expecting that going into the new year there will be some retailers who will not be able to keep going.
“Consumers have limited spending power and they are worried about jobs and about the economy. At the same time, retailers are facing rising costs including business rates.”
A report at the end of last year by business recovery expert Begbies Traynor suggested 140 high street firms were facing financial difficulties as the Christmas season came around.
Julie Palmer, a partner at Begbies Traynor, said Jessops’ administration was “yet another blow” for the UK high street and showed that January was a high-risk month for retailers.
“With substantial cash outflows on the 25 December quarterly rent day combining with fierce pricing competition during the January sales, it puts significant pressure on finances.
“The administration of such a household name can only serve to damage consumer confidence further in the months ahead.”
Last January, the La Senza underwear chain, Blacks camping gear, Past Times retro gift shops, Peacock Clothing and Pumpkin Patch children’s wear all went into administration.
Charles Maunder, head of the banking, restructuring and insolvency team at law firm Michelmores, said Jessops’ problems were examples of the issues facing the retail industry.
“This is another success for ‘e-street’ to chalk up against the high street.
“It is further evidence, if any was needed following Comet’s demise, of the difficulties faced in particular by high street electronics retailers such as Comet trying to compete against the purely online traders.
“This also highlights the challenges faced by retailers with substantially fixed overheads trying to adapt fast enough in a rapidly changing market.”
Leicester-based Jessops has been struggling for some time. In 2009, it went close to collapse but was rescued by its main lender – HSBC – in a controversial debt-for-equity swap that saw it taken off the stock market.
Since then, Jessops has been revamping stores and boosting its online business, but could not turn the tide.
Last week, the company announced that 15 of its stores would be closing, but negotiations between shareholders and creditors broke down.
One retail analyst said Jessops was vulnerable because its core product became less desirable. Neil Saunders, managing director of Conlumino, said: “Over the past few years, the market for amateur cameras has shrunk as consumers have switched to using their smartphones.
“Meanwhile, while the professional market has remained fairly solid, many photographers have been content to buy from niche online specialists where prices are cheaper and ranges are more extensive. This has left Jessops serving a dwindling number of consumers.”
Too many negatives: the firm, what went wrong and your rights
Out of pocket? Jessops’ administration is symptom of changes
Consumer rights group Which? said customers need to be aware of their rights as it emerged that people with Jessops gift vouchers are unable to use them.
Administrators for the camera chain have said the company will also be unable to accept returned goods.
However, a spokeswoman for Which? said claims could be made by writing to the administrators with proof of the vouchers, and if items bought on a credit card are worth more than £100 a refund can be had.
The spokeswoman said: “If a store goes into administration, it may refuse to accept gift vouchers, though this situation may change.
“If they do refuse and you need to make a claim, write to the administrators with proof of your vouchers. Unfortunately, there is no guarantee that you will get the full value back, and a claim could take some time for the administrators to process.
“If you have bought an extended warranty, check the small print carefully. Often it’s provided by a third party in which case you shouldn’t be affected.
“It is also worth remembering that if you’ve bought items costing more than £100 on a credit card and the supplier goes bust, you can claim a refund by writing to the credit company with details of your claim.”
Jessops traces it roots to a chemist store opened in Leicester 130 years ago.
It was in 1935 that Frank Jessop transformed it into a photography shop. The company quickly grew under the leadership of Jessop’s son, Alan Jessop, who transformed it into a cut-price retailer of photographic equipment.
The company initially reaped the rewards of the boom in digital cameras, and by 2001 the number of branches on the high street hit 200.
In 2002, Dutch bank ABN Amro’s venture capital arm bought Jessops for £116 million. But by the middle of the decade, it began to struggle against other high street and internet competitors.
Yesterday’s announcement shows that since 2004, makeovers, store closures, a flotation and debt-for-equity swap were not enough to keep it in business.
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