Bargain bookseller The Works was locked in crisis talks to stave off administration as Retail Week went to press.
The retailer’s main bank, HSBC, was understood to be mulling a rescue package, but it is thought to have been leaning towards placing the 300-store retailer into administration as early as next week.
If The Works does fall into administration, it will become the latest victim of dire trading on the high street, which has been compounded by soaring business costs and a collapse in consumer confidence.
In the past two months, homewares retailer Ponden Mill and footwear chain Dolcis have gone into administration.
The Works is thought to have suffered weak trading in the second half of 2007. One industry source suspected that the retailer had faltered under pressure from the big supermarkets’ incursion into books, as well as a resurgent WHSmith and Waterstone’s.
In 2005, Hermes Private Equity backed a£50 million management buy-out of The Works, with debt provided by HSBC. The retailer is understood to have appointed business advisory firm Kroll last month to carry out an independent review of its commercial health and prospects.
In December, The Works chairman Tim Brookes told Retail Week that the retailer would put its store opening programme on hold this year, following mixed sales in the run-up to Christmas.
Brookes said then: “Consumers are really worried, footfall is down. I am horribly pessimistic for next year.”
Eyebrows in the sector were raised last summer when The Works chief executive Derek Hine and retail operations director Andrew Walker-Smith left. Buying and marketing director Chris Boardman became acting chief executive.
Alongside The Works, the retailer also trades as Book Depot, Banana Bookshop, Booksale and Art Depot in factory outlets and other out-of-town locations. The company had ambitions to reach 400 stores in the UK.
According to accounts filed at Companies House, The Works delivered a pre-tax profit of£3.4 million on turnover of£96.4 million for the year to April 29, 2006.
The Works and HSBC were unavailable for comment.
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