Clinton Cards folds into administration, 8,000 jobs at risk

Zolfo Cooper has been appointed administrator to Clinton Cards, as tipped by Retail-Week.com this morning.

In terms of UK stores, it is the biggest collapse of a listed retailer since Woolworths in 2008.

Clinton Cards’ administration follows that of Game and Peacocks earlier this year.

Peter Saville, joint administrator and partner at Zolfo Cooper, said the first priority would be to “stabilise the business and assess its financial position”.

Saville warned that “a number of stores will need to be closed in order to make the business financially viable”.

He said Zolfo Cooper would “continue to trade the business whilst we undertake a full marketing exercise to find buyers for all or parts of the Group so that the best possible outcome can be achieved for stakeholders”.

Clinton Cards was forced to call in the administrators after its largest supplier American Greetings bought its debt last night and told the retailer it intended to enforce the loan against the company.

Because Clinton Cards cannot repay the loan, the supplier informed the Clinton Cards’ board that it intended to place the business into administration.

American Greetings is owed $25m (£15.5m) by Clinton Cards, much of which is now in default, the business said.

It had been speculated that American Greetings would buy the retailer in a pre-pack administration deal.

American Greetings chief executive Zev Weiss confirmed acquiring the business is an option.

“We would like to see Clinton Cards continue as an important retailer in the specialty channel of distribution in the UK greeting card market,” he added.

“As secured lender, we are better positioned to assist in identifying and obtaining the best possible solution for Clinton Cards, where we may ultimately participate in the ownership of the business or may continue as a supplier to any buyer of the business.

“We believe that properly managed, and with the appropriate capital structure, Clinton Cards could be both an important and profitable retailer in the specialty channel of distribution over the long term.”

Saville said: “The challenging business environment, and in particular the increased competition for greetings cards and related products, meant that the group required radical restructuring and administration was the last remaining option available.

“Clinton Cards and Birthdays are very well-known brands on the high street and we believe that there is a strong underlying core business. We are therefore confident that it is an attractive proposition for a range of potential buyers and welcome expressions of interest from third parties.”

Clinton Cards, which operates 750 stores in the UK, revealed in a statement to the City this morning that its banks Barclays and Royal bank of Scotland had sold its £35m debt to American Greetings. Clinton Cards had hoped that following American Greetings’ purchase of the debt, the supplier would work with it to restructure the business.

Clinton Cards chief executive Darcy Willson-Rymer was expected to publish his long-awaited strategic review of the business this week, which he has been leading since he joined the retailer in October.

But American Greetings said it had recently stopped supplying Clinton Cards a a result of defaulting on “numerous payment obligations under our supply arrangements”.

“As a result of its failure to pay amounts owed to us, together with the current state of its business, we expect that a portion of our unsecured exposure from Clinton Cards may be impaired.”

Clintons has been suffering from an expensive property portfolio as well as fierce compeition from store-based rivals including Cards Factory and online competitors such as Moonpig.