2500 jobs lost as major grocery wholesaler Palmer & Harvey collapses

Palmer & Harvey

One of the UK’s biggest grocery wholesalers, Palmer & Harvey, has collapsed into administration, leading to the redundancy of 2500 staff members.

The company, which employs around 3400 people, supplies cigarettes, alcohol, groceries and frozen food to 90,000 grocery stores around the country. It is the main supplier for Costcutter Supermarket Group and has major brands like Tesco in its retail accounts.

The 90-year-old firm has appointed PwC as administrators after “challenging trading conditions” heaped pressure on its cash flow and efforts to revive the business failed.

Palmer & Harvey entered exclusive takeover talks with the Carlyle Group in October, but the US private equity fund’s offer of a significant capital investment in exchange for a controlling stake did not go ahead.

With Christmas less than a month away, PwC said there would be 2500 immediate redundancies at the head office and branch network.

The future of the approximately 900 staff that remain is still uncertain.

Palmer & Harvey’s collapse has prompted Costcutter to trigger emergency plans and search for other suppliers.

“This is a devastating blow for everyone who has been involved in the business,” PwC joint administrator Matthew Callaghan said.

“The administration team will focus on working with employees, clients and suppliers to facilitate a smooth and effective wind-down or transfer of operations over the next few weeks.

“The P&H Group has faced a challenging trading environment, and the need for significant restructuring has been recognised for some while.

“The company has insufficient cash resources to continue to trade beyond the short term and the directors have concluded that there is no longer any reasonable prospect of a sale.

“Therefore, the directors have had no choice but appoint administrators.”

PwC said they were now in the process of seeking buyers for the wholesaler’s subsidiary businesses: P&H Direct Van Sales, P&H Sweetdirect and P&H Snacksdirect.

PwC added that 450 workers remain in the wholesale business as the operation is moved towards an “orderly closure”.

“The administrators are working closely with employees affected by the closure of the business to ensure they receive the support they need during this difficult time to assist with their claims for redundancy and other compensatory payments,” Callaghan said.

“Our priority is to ensure that all employees made redundant are assisted in processing their claims with immediate effect.”

Palmer & Harvey’s collapse comes amid a tumultuous period within the grocery sector.

Recently, Tesco’s £3.7 billion merger with food wholesaler Booker – Palmer & Harvey’s main rival – was given the provisional green light by the Competition and Markets Authority (CMA), despite fears raised by a raft of rival wholesalers.

The Co-op has also confirmed a takeover of Nisa Retail, although this still needs approval from the CMA.

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