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Walmsley furniture chain is latest retailer to collapse

The fragile state of the high street has been underlined by the collapse of Walmsley's furniture chain, the latest in a long line of homeware retailers to enter administration.

The collapse will see 35 stores close with immediate effect and about 200 people lose their jobs.
Private equity firm SKG Capital has bought 25 of Walmsley's 60 stores, securing 104 positions, including, it is believed, that of the director Julie Reynolds.

The collapse came as broker Deutsche Bank published an in-depth and pessimistic research note into the state of the consumer economy, saying that it was forced to cut forecasts on a number of retailers because consumers would have less money in their pocket than previously expected, as a result of high inflation and frozen or falling wages.

It forecasted that discretionary expenditure growth on non-food retail would weaken further in 2012 to just 1.2pc, compared with 3.7pc in 2010 and an estimate of 2.6pc in 2011.

It reduced Marks & Spencer's price target from 420p to 355p, Carpetright's from 550p to 450p, Halfords' from 380p to 325p, while Home Retail Group had its target taken down to 140p from 185p.

The broker was, however, positive on Kingfisher and WH Smith, saying both had proved that they could shrug off the worst effects of the downturn.

The failure of Walmsley's, which specialised in sofas and dining furniture, follows the demise of Floors-2-Go, Lombok and parts of Habitat, Moben kitchens and Dolphin bathrooms chains.

In the year to May 2010, the most recently available figures, Walmsley's pre-tax profits fell by two-thirds to £106,000 on turnover of £25.8m.

It was one of the chains, along with Argos and Land of Leather, to be criticised in 2008 for selling Chinese-made "toxic" sofas, which caused owners to suffer from rashes. More than 5,000 people joined a group litigation, making it the largest consumer injury class action in UK history.

Source : Harry Wallop – The Telegraph

01 September 2011
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