Thousands of jobs at risk as Ethel Austin collapses

Apr 16 2008 by Bill Gleeson, Liverpool Daily Post

MERSEYSIDE-BASED retail chain Ethel Austin collapsed into administration yesterday, raising fears for the jobs of thousands of staff.

Joint administrators Philip Duffy and David Whitehouse, appointed yesterday morning, told head office staff in Knowsley that they hoped to sell the business as a going concern, but also warned redundancies were inevitable.

The discount retailer, founded in Anfield in 1934, has 300 stores throughout the UK, from Scotland to the South West and South East of England.

The latest annual turnover for the company is £150m and it employs around 2,800 staff throughout the business.

Administrator Phil Duffy, from Menzies Corporate Restructuring, said: “At this stage, it’s too early to be certain about the exact reasons for the financial difficulties.

“Our primary concern is to ensure that the business contin-ues to trade in the coming weeks and that a suitable buyer is found.

“Despite the current challenges faced by the retail sector, we remain confident that a buyer can be found.

“Ethel Austin has a good brand and good customer base and this, together with its national cover-age, should make it an attractive opportunity for a retailer.

“We appreciate that this is a worrying time for staff and are therefore keen to keep them informed of progress.” Mr Duffy briefed head office staff on Merseyside yesterday. At that meeting, he warned them that some redundancies were inevitable.

Mr Duffy, the administrator who handled last year’s collapse of Liverpool’s iconic Lewis’s department store, blamed tough conditions on the high street.

“There have been 10 to 15 large retailers who have become insolvent since January.”

Ethel Austin is owned by retail entrepreneur Elaine McPherson, who previously owned low-price shop chain MK 1.

Ms McPherson, who co-owned MK 1 with Lewis’s owner David Thompson, sold it for a reported £40m in 2005.

She only bought Ethel Austin from Dutch ABN Amro within the last two weeks, a move that looks set to have cost her some of her wealth.

Fears over the future of Ethel Austin had emerged in recent weeks, with reports that it was locked in talks with banks about its future financial needs.

At that time, Ethel Austin chief executive Simon Cooper had sought to calm nerves, insisting it was “business as usual”.

The firm was founded in the Anfield council home of Ethel and George Austin in 1934.

It went through a refurbishment programme last year under the “Refresh” banner, which had remodelled 260 shops throughout the UK, introducing a modern look and a younger style to its baby and adult lines.

Its first shop opened in Walton village in 1936. George died shortly after the firm’s 50th anniversary, and Ethel died in 1989.

In 2002, the last links with the family were severed when the firm was sold to a management buy-out team for £55m.

Two years later, it was sold to banking group ABN Amro for £122.5m.

Four years ago, Ethel Austin began a major expansion drive that sought to grow profits and sales by more than doubling the number of stores it operates around the country.

The Knowsley-based retail chain had hoped to open 200 new stores, mainly in areas where the group was under-represented, including within the M25 and the south coast of England.

However, those ambitious plans were never realised.

The firm which began in an Anfield front room > > >