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Focus collapse set to cost Halfords 7.5m

THE collapse of the Focus DIY group is set to cost retailer Halfords £7.5m, the Redditch company has announced.

The money stems from a long-standing guarantee made by Halfords in the 1980s when it and Focus were part of the same group.

In a statement to the London Stock Exchange today, Halfords said the non-recurring expense would be included in its results for the year ended April 1, 2011. The group issues its preliminary results on Thursday.

“Following the decision by Focus DIY to enter into administration and the subsequent announcement of the closure of stores, Halfords will recognise a non-recurring expense of £7.5m in the year ended April 1, 2011,” said the statement.

“This non-recurring expense relates to the creation of a provision for the potential liabilities arising from guarantees provided by Halfords prior to July 1989. An estimate of the potential liability relating to these guarantees was previously disclosed as a contingent liability.

“The guarantees were provided to landlords of properties leased by Payless DIY (now part of Focus DIY) when both Halfords and Payless DIY were under the ownership of the Ward White Group.”

Halfords said it anticipated the cash outflow relating to the guarantees would be incurred over the next three years. The group is now taking action to reduce the impact of the liabilities.

Focus, which had 179 stores around the UK, went into administration last month after owner Cerberus Capital admitted the company was close to defaulting on its debts. The companies affected by the administration were: Focus (DIY) Ltd, Focus (Investments) Ltd, Payless DIY Ltd, Payless Properties Ltd, Do It All Ltd and Do It All (Holdings) Ltd.

Ernst & Young was appointed as administrator but could find no buyer for the group. A number of stores were sold to B&Q and Screwfix owner Kingfisher plc in a £23m deal which saved 700 jobs. Other stores were purchased by Wickes and B&M Bargains, however, the bulk of the group has remained unsold.

Ernst & Young is hoping a number of the remaining 120 stores can be sold before the end of the month, reducing the 3,000 jobs still at risk.

Source : Duncan Tift – The Business Desk West Midlands
www.thebusinessdesk.com/westmidlands/news/174548-focus-collapse-set-to-cost-halfords-7.5m.html?

03 June 2011
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