Comet electricals administrators formally begin search for saviour

http://www.guardian.co.uk/business/2012/nov/02/comet-electricals-administrators-search-saviour

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More than 6,600 retail workers were facing the threat of redundancy on Friday after administrators were formally appointed to stricken electricals chain Comet.

In what could result in the biggest round of high street job losses since Woolworths collapsed in 2008, restructuring experts from accountants Deloitte said a hunt for a saviour of the 80-year-old chain had begun. A fire sale of stock is likely to be planned in the coming days.

Neville Kahn, a partner in Deloitte's restructuring team, said all 236 stores would remain open over the weekend and employees would continue to be paid for the time being. "Our immediate priorities are to stabilise the business, fully assess its financial position and begin an urgent process to seek a suitable buyer which would also preserve jobs," he said.

Loss-making Comet had been struggling for years and Kahn blamed its problems on the march of internet-only retailers such as Amazon. "Comet has been battling the changing landscape of the electrical retail sector for many years," said Kahn. "It has become increasingly difficult for it to compete with online retailers which don't face the same overheads such as store rents and business rates."

Comet's failure comes nine months after the company was taken over by investment firm OpCapita, which bought it for a nominal £2 in February.

Opcapita was also handed a £50m dowry to take over the business. The new venture struggled when suppliers, worried about its survival prospects, demanded payment for goods up front.

Without the largesse of its suppliers, Deloitte said Comet had been unable to buy stock ahead of the key Christmas trading period. "The inability to obtain supplier credit for the peak Christmas trading period means that the company had no realistic prospect of raising further capital to build up sufficient stock to allow it to continue trading," said Kahn.

Comet's website has been taken down several times since news of its problems broke, reportedly due to uncertainty over stock levels. The chain has said it will honour deliveries that have been paid for but shoppers have been told to spend any gift cards or vouchers as soon as possible – "whilst stocks last".

As yet no redundancies have been announced at the head office in Rickmansworth or support centres in Clevedon, Somerset, and Hull.

The high street has been rocked by a series of high profile failures this year including Clinton Cards, Blacks Leisure, Game and Peacocks. Comet's problems come a month after 2,000 jobs were lost in the collapse of Wigan-based JJB Sports.