Electronics retail chain Maplin has gone into administration after talks to save the business failed.
The company, which operates 217 stores, employs 2,335 staff across the UK and Ireland and has an annual turnover of £235.8 million, has appointed joint administrators Zelf Hussain, Toby Underwood and Ian Green of PwC.
Maplin will continue to trade, as the administrators hold discussions with interested parties in an attempt to find a buyer.
Said Mr Hussain, joint administrator and PwC partner: “The challenging conditions in the UK retail sector are well documented. Like many other retailers, Maplin has been hit hard by a slowdown in consumer spending and more expensive imports as the pound has weakened.
“Our initial focus as administrators will be to engage with parties who may be interested in acquiring all or part of the company. We will continue to trade the business as normal while a buyer is sought. Staff have been paid their February wages and will continue to be paid for future work while the company is in administration.”
News of a possible sale was first reported by Sky News earlier this month. The situation arose after insurers withdrew credit last year because of falling profits.
Owners Rutland Partners, which took control of the business in 2014, were rumoured to be in talks with a number of retailers, including clothing chain Edinburgh Woollen Mill.
Maplin saw sales during the Christmas period fall by seven per cent on a like-for-like basis, partly due to stock shortages triggered by the loss of suppliers’ insurance.
- Update: On March 1, it was reported that Dixons Carphone has stepped in to offer Maplin employees a lifeline. Dixons Carphone chief executive Sebastian James told BBC News: “We are really sorry to hear that Maplin has fallen into administration. Maplin has long been famous for its expert and friendly team, and this is a very difficult time for all Maplin colleagues.
“We are always on the lookout for experienced staff who love serving customers and bring expertise in technology, and I hope that we can offer some Maplin employees exciting opportunities within the Dixons Carphone family.”
‘Maplin has been on thin ice since last year…’
Eleanor Parr, retail analyst at GlobalData, gives her reaction to the news that Maplin has gone into administration
“It seems today [February 28] is Black Wednesday for high street retailers, with Maplin announcing it has fallen into administration barely an hour after Toys R Us suffered the same fate.
“The electricals specialist has been on thin ice since last year, when concerned credit insurers cut their exposure to the retailer, meaning suppliers were unable to insure their debts with Maplin. This resulted in key suppliers refusing to provide stock to the retailer, contributing to a seven per cent decline in like-for-like sales over the Christmas period.
“Over the past month, Maplin, which is owned by Rutland Partners, has been in talks with potential buyers and sought to strike a deal with Edinburgh Woollen Mill (EWM). With a £15 million VAT bill due today [February 28], the company was in dire need of capital to enable it to continue to trade. However, Maplin’s offer was rejected last night as EWM insisted Rutland Partners maintained a stake in the company.
“In its last full year, pre-tax loss grew year on year by £9.2m to £16.1m, although the retailer explained that £10m of this loss was on account of write-downs and they also incurred a £13.7m charge from interest on loan notes due to its owners. Its debt was an ongoing concern to its suppliers, who worried about Maplin’s future should it fail to generate cash to pay the debt loaded onto it by its owners and today they have been proved right.
“Maplin has insisted its issues are predominantly macro, highlighting it does still have a place on the UK high street. Indeed its full year results last year were decent, with revenue growing 0.5 per cent to £236m, in line with GlobalData’s forecast growth for the electrical sector.
“Maplin has continued to invest in the smart home, an area of strong growth within the electricals market. Its customer demographic, mainly affluent tech enthusiasts, have been quick to adopt smart-home living, allowing it to become an authority within the market and the retailer highlighted strong sales in this category, growing 161 per cent year on year.
“However, this performance has clearly not been enough to reassure investors, with Maplin unable to secure the capital it required to save it from plunging into administration this morning.”