Powerhouse, the UK’s biggest independent electrical retailer, yesterday revealed that 813 jobs were to be axed alongside 93 stores, as it was placed in administrative receivership.
Nick Dargan, joint administrative receiver at Deloitte & Touche, said: “We are carrying out a rapid assessment of the company’s operations with a view to selling the business as a going concern. The store closures will take place on August 29.”
Powerhouse, which employs more than 3,000 staff and has 223 stores, has been battling to safeguard its future after trade insurers, thought to be Euler Trade Indemnity and NCM Girling, withdrew cover for some of the company’s suppliers. Neither insurer was available for comment.
Powerhouse chief executive Derrick Broomfield said yesterday that the withdrawal had been unexpected. However, one supplier said: “This was not a shock at all. Powerhouse owes around £50m to suppliers.”
He said suppliers had been invited to a meeting at the National Motorcycle Museum in Birmingham on July 29, when Mr Broomfield “stood up and announced that Powerhouse Retail had made an £11.5m loss in the first quarter alone”.
At that meeting, suppliers were told that Euler had “pulled the plug two months before” and Girling, which had underwritten £9m had reduced that to £5m.
Deloitte revealed yesterday that the five Powerhouse businesses in administrative receivership are 96pc-owned by nine members of the management team, including Mr Broomfield.
Earlier this year Powerhouse sold its profitable warranty business for about £9.5m. It is understood that the proceeds paid debts owed to Lloyds TSB, which agreed an overdraft facility with the Bicester-based company in 2002.
The company, which was formerly owned by regional electricity companies Midlands, Southern and Eastern, was bought out from Hanson by its management in 1996. Starting with 387,000 sq.ft of retail space in 1997 it has more than tripled in size and is now the third largest electrical retailer behind high street giants Dixons and Comet.
Group sales rose 25pc to £399m in the last financial year but post-tax profits fell sharply to £300,000 from £5.2m a year earlier. Barclays Private Equity owns 4pc of Powerhouse. It initially invested £1m in a 7.5pc stake at the time of the buyout but has since cut its holding.
>From The Telegraph