Winter of discontent: Maplin and Toys R Us collapse, 5, 500 jobs lost
Administrators were called to both Toys R Us UK and Maplin on 28th February 2018, into hours of each other as both had failed in their efforts to secure a rescue.
Toys R Us failed despite securing a deal among its creditors just before Christmas that allowed it to shut its worst-performing stores and slash its rent bill, but succumbed to a £15m VAT payment demand.
Administrators confirmed all 105 stores would remain open for now and that most of the stock would be discounted to help it shift as the search for a buyer continued, as 3000 staff at the country’s biggest toy chain are lost.
The 40-year-old electricals chain Maplin which has 200 stores, battered by the impact of the Brexit-hit pound, and the withdrawal of credit insurance, owned by Rutland Fund Management called in PwC when talks over a rescue by Edinburgh Woollen Mill broke down, putting 2,500 jobs at risk.
Graham Harris, Maplin’s chief executive said: “I can confirm this morning that it has not been possible to secure a solvent sale of the business, as a result, we now have no alternative but to enter into an administration process.”
QBE was the first credit insurer to remove trade indemnity on Maplin due to concerns over its bricks-and-mortar overheads coupled with high debt, and the fact it was losing sales to online giants including Amazon.
In the year to 18th March 2017, Maplin’s turnover was £235.8m in sales compared to £234.5m in 2016. It reported an operating loss of £2.65m compared to an operating profit of £1.82m. After interest and payouts, Maplin reported a loss of £15.75m for the year, £11.68m loss in fiscal 2016. Rutland Partners paid £85m for Maplin in 2014, which is much lower than the £244m that previous owner Montagu paid for the business. Maplin owes £99m in long-term loan notes and borrowings.
Prezzo, the Italian themed casual dining chain was restructuring with a loss of several hundred jobs and the closure of over 100 outlets.
Ne Look, the clothing chain, sought consent from the bondholders for a restructuring that would involve closing 600 stores. UK consumer spending declined in January 2018, for the first time in five years, as per Visa.
Rebecca Long-Bailey, the Shadow business secretary, called on the government to “ urgently address problems in the retail sector”.
About 100 retailers went bust last year according to Deloitte, a 28 per cent increase on 2016.