Photographic retailer Jessops has entered administration today, following “significant decline in its core marketplace and… reducing confidence in UK retail”, according to administrators PricewaterhouseCoopers (PwC).
Despite reporting profit for the year to December 31st 2012 of £236 million, the retailer’s position deteriorated in the weeks before Christmas and forecasts for the photography retail market indicate a further decline in the market in the coming year.
As such, although additional funding has been made available to Jessops, poor sales have weakened its fragile position, which had been worsened by a credit squeeze within its supplier base.
Jessops currently operates from 192 stores across the UK and employs some 2,000 people and administrators concede that redundancies are unavoidable.
Joint administrator and partner at PwC Rob Hunt explained the company’s position, commenting: “Over the last few days the directors, funders and key suppliers have been in discussions as regards additional consensual financial support for the business.
“However these discussions have not been successful. In light of these irreconcilable differences the directors decided to appoint administrators and we were appointed earlier today.
“Our most pressing task is to review the Company’s financial position and hold discussions with its principal stakeholders to see if the business can be preserved.
“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.”
January is a notoriously difficult time for the industry and Julie Palmer, a Partner at recovery specialist firm Begbies Traynor, warned that this latest high street casualty may damage confidence in the sector.
She commented: “Jessop’s administration is yet another blow for the UK’s high street retailers, which have struggled as consumers continue to switch spending to supermarkets and online retailers, having become increasingly price-driven, and as new technologies, such as more sophisticated camera phones, switch demand away from legacy retailers.
“Jessop’s administration demonstrates that January is a high risk month for retailers. With substantial cash outflows on December 25th 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.”