Kitchens Direct and Moben owner Homeform Group’s decision to file for administration yesterday afternoon is unsurprising considering its position in the market and the time of year, according to analysts.
The board announcement came one day before so-called ‘quarter day’, the due date for commercial rent payments, and insolvency professionals group R3 had predicted that this would have a major impact on the UK retail industry.
With convenience supermarket Haldanes also officially entering administration this week, putting hundreds of jobs at risk, it has clearly been a week that proves the precarious state of many retailers’ finances.
Commenting to Retail Gazette this morning, President of R3 Frances Coulson said that this rental payment deadline can be the final straw for struggling businesses.
“It was a deep recession but we’re experiencing a slow recovery and lots of companies have been limping along,” she explained.
“The difference every quarter day is the pressure point – any slight change can make a huge difference to a business’s financial situation.”
Homeform, which also owns the Sharps bedroom brand and Dolphin bathrooms, was a “disaster waiting to happen”, according to Arden Partners Retail Analyst Nick Bubb, who believes the retailer did not stand a chance in such a slow growth market.
“The company was trading from off-pitch high street locations in a declining market, so sales have been hit from all directions – a real double whammy,” he remarked.
It seems the general mood from those trading in homewares and big ticket items has been negative for more than a year now, with staff also feeling the pressure.
Results from the Retail Eyes & Retail Gazette Salary Survey 2011, published yesterday, showed that those working in the home & DIY sector are among the least confident and most unhappy of all retail employees in the UK.
Some 43 per cent of representatives from the sector said their opinion of their employer had declined in the 16 months following recession, while 54 per cent said they were less content than they had been in January 2010.
Coulson argued: “Research shows that over 80 per cent of people have altered their spending patterns recently and half of consumers are reining in their spending.
“People have to buy food but they do not need a new kitchen or bathroom, so it is natural that these sectors will suffer.”
Homeform said yesterday that its directors are “close to securing a deal that will safeguard the future of the Sharps (Bedrooms) and Kitchen Direct businesses”, while it plans to sell Moben and Dolphin.
Similar statements from fellow retail groups could be on the cards around September 29th, the next quarter day, when many companies will be required to pay another portion of their rent.