Hundreds more jobs are to be lost in the retail industry after Axminster Carpets fell into administration and private equity group Sun European Partners (Frankfurt: A0JJY6 - news) edged closer to a takeover of bed group Dreams that is likely to result in the closure of stores.
A total of 300 jobs were cut at Axminster, whose roots trace back to 1755 and the Devonshire town it is named after, following the appointment of Duff & Phelps as administrators.
Duff & Phelps will downscale carpet manufacturing and end yarn production as they assess Axminster’s financial position and “explore all potential options to maximise the realisations for the company’s creditors including a sale of the business.
The remaining 100 Axminster staff will stay with the company during the administration process.
The majority of Axminster’s employees work at its base in Axminster, but it also had a smaller manufacturing operation in Buckfast, Devon, where it opened a spinning and dyeing plant in 1950 that supplies the yarn for the carpets.
The administrators said the collapse of the carpet market was due to an increase in raw material prices, the closure of a loss-making subsidiary and a fall in sales in the UK.
Meanwhile, Sun European Partners, the private equity group that owns furniture group ScS Sofas, is close to completing a deal to buy Dreams through a controversial pre-pack administration.
The structuring of the deal as a pre-pack administration will allow Sun European to shed many of Dreams’ liabilities, including about 90 of its 260 stores, which will lead to hundreds of job losses.
Sun European has seen off competition from Mike Clare, the founder of Dreams, and Sir Philip Green to buy Dreams from Exponent (NasdaqGS: EXPO - news) and its lending banks led by Royal Bank of Scotland (LSE: RBS.L - news) .