A MAJOR homeware chain will close 218 stores starting in days, despite confirming a pre-pack administration rescue deal.
Carpetright has been bought in a rescue deal by rival Tapi, but will shut the vast majority of stores and cut more than 1,000 jobs.
On Monday, the flooring retailer Tapi announced that it had agreed to buy 54 Carpetright stores, two warehouses, the brand, and its intellectual property in a pre-pack administration deal.
It’s understood that Tapi is the only competitor to have offered a deal that involves rescuing both jobs and stores.
However, the deal will not save the majority of the business, including its head office in Purfleet, Essex.
Jeevan Karir, managing director of Tapi Carpets & Floors Limited, said: “Our goal, initially, was to try to save all of Carpetright. However, as we looked into the details of the situation, we quickly established that saving the entire business was unviable.
“The business has been materially loss-making for a number of years, and it has significant debt held by the owner.
“We then turned ourselves to trying to save a number of stores whilst being mindful of how the competition authorities would look at any deal.”
Kevin Barrett, chief executive of Carpetright’s owners Nestware Holdings, added: “We have tried everything to turn Carpetright around and I’m truly sorry that we were unable to save more jobs.”
PwC has provided a full list of the 213 stores expected to close over the coming days.
Stores written with “FV” initials are based inside Furniture Village stores.
Carpetright put PwC administrators on standby on Friday as it sought a “period of protection” to secure additional investment.
It was believed the executives at the retailer were reluctant to approach Tapi about a deal over fears it could gain access to sensitive trading information.
It came after Carpetright’s owner, Meditor, a British hedge fund, ruled out buying back the business or investing any more money.
Meditor owns Nestware Holdings and also owns The Floor Room.
Carpetright filed a notice to appoint administrators two weeks ago, on July 12.
The firm previously said it was using the administration process to finalise additional investments and secure the company’s long-term future.
Carpetright, which is one of the country’s biggest floor-covering retailers, said the decision was made following “financial pressures” after a software attack that disrupted trade in April.
The retailer was then put on the market.
The retailer, founded by Lord Harris of Peckham in 1988, was taken off the stock market in 2019 by its biggest investor, Meditor.
However, the Harris family became one of Carpetright’s biggest challenges as son Martin Harris launched a rival flooring retailer, Tapi, which increased competition.
The 1988-founded icon British chain brought in restructuring experts Teneo earlier this year to examine cost-cutting measures.
A lack of consumer spending in recent years and a rise in competition are thought to have caused problems for the brand.
At the time of its collapse, Carpertright traded out of 272 stores.
Tapi has 170 showrooms across the UK and a fleet of over 150 mobile showrooms providing a home shopping service direct to customers.
However, 54 Carpetright stores will continue to trade following the agreement of Tapi’s rescue deal.
It’s been a tricky time for home improvement chains, both large and small.
It comes as shoppers have been cutting back on spending following the pandemic.
Plus the recent turmoil in the housing market has meant that homeowners aren’t as focused on DIY projects as they once were.
In the spring, Kingfisher, which owns both B&Q and Screwfix, revealed annual profits slumped by more than a quarter.
The company reported a 25.1% drop in underlying pre-tax profits to £568million for the year to January 31, 2024.
Window and door specialist Everest called in administrators in April leaving customers in the dark about their orders
Last year, the group had previously cautioned profits would slip after a 36% drop in pre-tax profits from £1billion to £611million in the 12 months to January 2023.
Rival Wickes, also reported a 31% fall in profits to £52million on flat revenues of £1.55billion for 2023.
EMPTY shops have become an eyesore on many British high streets and are often symbolic of a town centre’s decline.
The Sun’s business editor Ashley Armstrong explains why so many retailers are shutting their doors.
In many cases, retailers are shutting stores because they are no longer the money-makers they once were because of the rise of online shopping.
Falling store sales and rising staff costs have made it even more expensive for shops to stay open. In some cases, retailers are shutting a store and reopening a new shop at the other end of a high street to reflect how a town has changed.
The problem is that when a big shop closes, footfall falls across the local high street, which puts more shops at risk of closing.
Retail parks are increasingly popular with shoppers, who want to be able to get easy, free parking at a time when local councils have hiked parking charges in towns.
Many retailers including Next and Marks & Spencer have been shutting stores on the high street and taking bigger stores in better-performing retail parks instead.
Boss Stuart Machin recently said that when it relocated a tired store in Chesterfield to a new big store in a retail park half a mile away, its sales in the area rose by 103 per cent.
In some cases, stores have been shut when a retailer goes bust, as in the case of Wilko, Debenhams Topshop, Dorothy Perkins and Paperchase to name a few.
What’s increasingly common is when a chain goes bust a rival retailer or private equity firm snaps up the intellectual property rights so they can own the brand and sell it online.
They may go on to open a handful of stores if there is customer demand, but there are rarely ever as many stores or in the same places.
Windows and doors company Safestyle collapsed into administration in October last year.
The company has a manufacturing site in Wombwell, near Barnsley and 42 sales branches and depots across the country.
