United Carpets, the Mexborough-based flooring and bed retailer, is hoping to negotiate major reductions in store rentals after going into administration.
Administrators from Begbies Traynor were appointed after attempts to get landlords to reduce rents failed and have sold United to a wholly owned subsidiary in a ‘pre-pack’ deal.
Begbies Traynor had earlier carried out a review of United’s business, which concluded that a significant number of the group’s corporate and franchised stores would be unable to keep trading, unless landlords reduced rents substantially.
United hopes that, following the administration, landlords will now agree to cut rents and says it will close stores where agreements cannot be reached.
The company said it was disappointed to have to go into administration, but was confident that core locations remaining following restructuring would create the foundations for a successful and sustainable business.
The pre-pack deal involves 73 stores, the group’s head office and its two warehouses.
n The number of retailers going into administration fell by 15 per cent during the third quarter of the year, according to research by business advisory firm Deloitte. Dan Butters, restructuring services partner at Deloitte in Yorkshire, said the decline was positive news and that, with some notable exceptions, the trend in recent months had been for fewer household names to suffer financial distress.
However, he warned that forecasts for the approaching festive period were mixed.
“Whilst the pressure is easing, the retail sector is still fragile. The real test will come in January once the busy Christmas trading period is over. The challenge will be for retailers not to discount too quickly,” said Mr Butters.