MFI Lay off 1/3 of company due to credit crunch
Due to the decent credit crunch and bank collapses MFI today announced that they would be closing down 1/3 of their stores 6 week today. Everythink in the stores that are closing now goes to 80% off.
I know this becuase my dad is the manager for ashford and came home today and told us that he would be made dedundent 6 weeks today, Luckily he gets sumin like 30 grand pay-off, should sort him out for a few months till he can get a new job.
So the credit crunch is actually starting to affect everyday companys.
http://www.guardian.co.uk/business/2008/oct/05/retail
Quote:
Kitchen supplier MFI will announce the closure of a substantial number of stores this week as part of a business restructuring designed to safeguard at least 2,000 jobs from an existing workforce of 3,100.
It is understood that between 90 and 100 stores could be placed in administration as soon as Monday, as the final details of a management buyout are set in place. Corporate restructuring specialist Kroll will oversee the process.
MFI has been forced to streamline its 192-strong store base after demand for big-ticket items such as kitchens collapsed in a paralysed housing market. MFI chief Gary Favell has been in negotiations with its landlords all week. They are being asked to sign up with the new MBO entity, but only if they agree to grant a three-month rent holiday until Christmas Eve. As The Observer went to press the situation was fluid, with the possibility that more landlords could accept, thus saving further jobs.
MFI has a troubled history, having been sold by Galiform, which is listed on the stock exchange, to turnaround specialist MEP two years ago for a nominal sum. Analysts said the retailer should have been restructured at that time. However, the shake-up sees MEP, run by former Deutsche Bank star banker Henry Jackson, quit the business, leaving a cash dowry that is the basis for the MBO. Galiform is still the guarantor of 46 MFI stores and would be responsible for rental payments until the leases expire, if they are among those surrendered.
Insiders said landlords and suppliers had come out in support of management and, in a statement last week, MFI was insistent that it was business as usual, with all customer deposits safe and all orders to be honoured.
Last week retail giants Tesco and Marks & Spencer both described the fragile state of consumer confidence as they updated the City, with John Lewis adding to the gloom with an 8.3 per cent drop in weekly sales. This week, worried investors will look to BHS owner Sir Philip Green for confirmation that the high street is facing its toughest trading conditions in a generation. The entrepreneur will deliver the privately held retailer's annual results on Tuesday and it is not expected to have been immune to the downturn. BHS made profts of £50m last year but Green has not paid himself a dividend since 2004.
Retailers are not the only sector under pressure, as the banking crisis fuels worries about job security and future spending power. However, amid worsening economic conditions, it appears banks are giving many indebted businesses a six-month reprieve. Senior restructuring experts suggest that with banks' balance sheets in such a parlous state, the last thing they need is to account for more non-performing loans.
