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UK DIY News

Focus DIY woes sends shiver down the high street

Focus DIY triggered fears of a fresh wave of High Street failures as it prepared to appoint administrators, putting nearly 4,000 jobs at risk.

The home improvements chain is majority owned by private equity firm Cerberus, which bought it from rivals Duke Street and Apax for £1 in 2007 and agreed to pay off £174million of debt. Focus said it is seeking consent from its creditors to appoint Ernst & Young as administrators.

Cerberus is the main creditor, along with finance house GMAC and Lloyds Banking Group, who are understood to be owed smaller amounts. They have five days in which to decide whether to accept E&Y as administrator or appoint their own firm. The total amount of money Focus owes is not being disclosed.

The company, chaired by Bill Grimsey, employs more than 3,900 people at 178 stores. Grimsey, a veteran retailer who previously worked at DIY chain Wickes and retailer Iceland, was brought in by Cerberus to turn Focus around.

However, his skills have not worked this time and the chain, which competes with larger rivals Kingfisher owned B&Q and Home Retail Group’s Homebase looks set to join the raft of retailers who have failed since the financial crisis.

They include Woolworths, which went under in 2008 and off-licence chain Oddbins, which fell into administration last month.
Others are on the critical list including sports retailer JJB, HMV and fashion chain AllSaints, which is searching for new backers
.
Although the Bank of England is expected to keep rates on hold at 0.5pc tomorrow, there are fears that a rise in future would cause further distress in the sector.

Sources said Focus was a victim of the woes in the housing market and that the final straws were the bad weather during its normally busy Christmas and New Year period.

The Chancellor’s austerity drive and the increase in VAT have also curbed spending by its customers.

Focus said in a statement it is seeking to appoint E&Y following a default under its senior credit facility and that it had realised there ‘were no alternatives that could be explored any further.’
Last year, the firm won approval from its creditors for a Company Voluntary Arrangement, in a deal aiming to avoid administration.

Focus DIY was founded by entrepreneur Bill Archer in 1987 with six stores in the Midlands and northern England. It previously owned Wickes, which was sold to Travis Perkins in 2005.

Source : Ruth Sutherland - Mail Online
www.dailymail.co.uk/money/article-1383617/Focus-DIY-woes-sends-shiver-High-Street.html?ito=feeds-newsxml

04 May 2011
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