Electricals retailer Comet is to enter administration following continued declining sales as a result of difficult trading conditions, it is understood.
Having opened in 1933 in Hull, the retailer was soon taken over by Kingfisher plc as it established its place within a growing market.
However, the retailer demerged from the group in 2003 and began operating under Kesa Electricals as it sought to differentiate itself from rivals in the market.
Last year however, as a result of ongoing difficulties which saw a considerable loss of market share and Kesa CEO Thierry Falque-Pierrotin see his annual renumeration decrease by €1 million (£802,180) in 2010/11, the retailer was sold to private investment firm OpCapita for a mere £2.
Comet employs over 6,000 people and has a store portfolio of 240 shops, though Retail Analyst at the Economist Intelligence Unit Jon Copestake explained that the retailer had been unable to improve its offering in an increasingly competitive market.
“The fact that OpCapita obtained the chain for a nominal £2 last year highlights the challenges faced by specialist electronics retailers,” he said.
“Even the recent improvements for market leader, Dixons Retail, cannot gloss over pre-tax losses in three of the last four financial years.
“The mooted collapse of Comet will come as little surprise given weak sentiment and the shift towards online channels for consumer electronics.”
Nonetheless, the timing of the collapse is a surprise given the traditional boost in Christmas trading, although the reported pulled support of credit insurers will have left the firm with little choice but to cut its losses.
Julie Palmer, a Partner at independent business recovery practice Begbies Traynor, warned that there may be further high street casualties before the end of the year.
“Comet’s administration is another blow for the UK’s high street retailers, which have struggled this year as consumers continue moving online to seek out bargains rather than pay full price in store,” Palmer said.
“Whether Comet’s administration will result in outlets being sold off to other retailers, or is merely a precursor to a sale, is as yet unclear but what is certain is that news of job cuts and store closures from yet another household name retailer can only have a damaging negative impact on consumer confidence in the months ahead.
“Tensions are clearly high as we enter the challenging but vital Christmas selling season, which we expect could be a ‘Russian roulette’ period for retailers.
“With inventory levels at their peak for Christmas trading, combined with the impact of shoppers holding out for last minute price reductions, cash flow pressures on retailers already experiencing financial distress could push some beyond the point of no return.”
Comet was not available for comment at the time of publication.