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Jessops goes into administration, putting 2,000 jobs at risk Jessops goes into administration, putting 2,000 jobs at risk
(about 9 hours later)
Up to 2,000 jobs are at risk at the troubled high-street camera chain Jessops after the retailer became the latest high profile victim of the great recession and collapsed into administration on Wednesday. Up to 2,000 jobs are at risk at the troubled high-street camera chain Jessops after it became the latest high-profile victim of the prolonged economic downturn and collapsed into administration on Wednesday.
PricewaterhouseCoopers has kicked off its attempts to find a buyer for the 192-store business but admitted that at least some stores would close adding to a string of closures last year following the collapse of high street names including Comet, JJB Sports, Game, Peacocks and Blacks Leisure. The administrators PricewaterhouseCoopers immediately attempted to find a buyer for the 192 stores but admitted that at least some would close, adding to a string of closures last year following the failure of high street names including Comet, JJB Sports, Game, Peacocks and Blacks Leisure.
Rob Hunt, joint administrator and partner at PwC, said Jessops had called in the accountants after last ditch talks between directors, funders and key suppliers on financial support for the business had ended in "irreconcilable differences." Jessops has been hit by changes in the way people buy cameras and the growing use of smartphones to take pictures.
A statement issued by PwC said that Jessops had suffered as British shoppers remain cautious amid the UK's economic troubles while the chain's core camera market was in decline. However, PwC said it was hopeful of finding a buyer as Jessops had "a well-known brand, strong reputation for service and a significant national footprint." Shoppers with Jessops gift vouchers will not be able to spend them, according to the administrators, although that decision might be reviewed in future. Returned goods will also not be accepted.
Jessops has suffered from years of uncertainty, managing to avoid administration in 2009 by securing a debt-for-equity swap with its lenders HSBC which wiped out shareholders. The bank now owns 47% after agreeing to write off £34m of debt, with another 33% of the shares owned by the company's pension fund and the remaining 20% held by an employee benefit trust. In 2010, then chief executive Trevor Moore said: "I don't think it gets much more secure than being 47% owned by HSBC. They are committed to a long-term plan for Jessops – it is not about a quick turnaround or spin-out." Rob Hunt, joint administrator and partner at PwC, said Jessops had called in the accountants after last-ditch talks on financial support for the business between directors, funders and key suppliers had ended in "irreconcilable differences".
The company achieved sales of £236m in the year to December 2012 but has not managed to trade profitably in any year since HSBC took its stake and it reported a £909,000 loss in its last published accounts for the year to 1 January 2012. A decision on store closures is expected to be taken within a matter of days and Eddie Williams, the joint administrator, said the number would depend on support from suppliers. "If we don't have their support the number of closures will be significantly higher," he said.
The group's woes were compounded last year when Moore quit to join HMV as its chief executive last year, while chairman David Adams also left. The company did not appoint a replacement for Moore, instead hiring Martyn Everett as chairman and promoting Neil Old to lead the business as chief operating officer. PwC said Jessops had suffered as British shoppers remained cautious amid the economic troubles while the chain's core camera market was in decline.
The UK high street is increasingly being hit by the UK's stuttering economy. In October, research showed that retail chains were accelerating store closures with an average of 20 stores a day shutting their doors in the first six months of 2012. A net total of 953 stores (openings minus closures) closed in the first six months of the year, compared with 174 in the whole of 2011, according to the report. However, the accountant is hopeful of finding a buyer as it had already had expressions of interest and Jessops had "a well-known brand, strong reputation for service and a significant national footprint".
But experts said PwC would struggle to find a buyer for the business and one of its few hopes was that a major camera supplier would back a management team to run a much smaller chain selling high-spec cameras which are not easily sold online.
Jessops traces it roots back to a chemist's store opened in Leicester 130 years ago. In 1935 Frank Jessop transformed it into a photography shop, and in the early days was mainly involved in hiring and selling 16mm cine films.
The company quickly grew under the leadership of Jessop's son, Alan Jessop, who transformed it into a cut-price retailer of photographic equipment. By the 1970s, it had outgrown its premises and moved to a new 20,000 sq ft site on Hinckley Road in Leicester, which was named as the largest photography store in the world by Guinness World Records. The shop later closed in 2008.
A second store followed in the early 1980s in London and as personal cameras became more popular and affordable, the firm expanded to more than 50 shops.
The firm ceased to be a family-run business in 1996 after Alan Jessop retired, and it was sold in a management buyout. In 2002, Dutch bank ABN Amro's venture capital arm bought Jessops for £116 million.
But by the middle of the decade, the company began to struggle to compete when other high street and internet competitors entered the market.
Jessops managed to avoid administration in 2009 in a deal with HSBC, which became its largest shareholder. The company has debts of £80m, nearly £30m of which is held by HSBC. Jessops is able to continue to trade while PwC seeks a buyer as HSBC extended funds, thought to be £1.5m, to help pay employees' salaries for January.
The bank now owns 47% after agreeing to write off £34m of debt, with another 33% of the shares owned by the firm's pension fund and the remaining 20% held by an employee benefit trust. The 33% stake owned by the pension fund is effectly controlled by the government-based rescue scheme, the Pension Protection Fund, which took the shares in return for taking on the final salary pension scheme in 2009. The stake owned by PPF = which guarantees to pay 90% of accrued benefits to employees up to a £29,000 ceiling, in 2009 - is now effectively worthless.
The decision by HSBC to step in last time prompted the then chief executive, Trevor Moore, to take comfort. "I don't think it gets much more secure than being 47% owned by HSBC. They are committed to a long-term plan for Jessops – it is not about a quick turnaround or spin-out," Moore said at the time.
While the firm achieved sales of £236m in the year to December 2012 it has not managed to trade profitably in any year since HSBC took its stake and it reported a £909,000 loss in its last published accounts for the year to 1 January 2012.
The group's woes were compounded last year when Moore quit to join HMV as its chief executive, while chairman, David Adams, also left. The company did not appoint a replacement for Moore, instead hiring Martyn Everett as chairman and promoting Neil Old to lead the business as chief operating officer.
The British high street is increasingly feeling the pinch. In October, research conducted by PwC and the Local Data Company found retail chains were accelerating store closures with an average of 20 stores a day shutting in the first six months of 2012. A net total of 953 stores (openings minus closures) closed in the first six months of the year, compared with 174 in the whole of 2011, the report found.